Call-Option Compensation and the Manager's Intertemporal Risk-Taking Behavior
15 Pages Posted: 9 Oct 2012
Date Written: August 9, 2012
This paper derives continuous-time conditions for a manager compensated with a call option to increase risk-taking. We show that the principles proposed by Ross (2004) in a one-period environment remain valid in continuous time.
Keywords: manager's compensation, call option, risk-taking, continuous-time modeling
JEL Classification: C61, D86, G11, G13
Suggested Citation: Suggested Citation