Stock Option Exercise And Gift Exchange Relationships: Evidence For A Large US Company

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Executive Summary

The authors investigate gift exchange relationships in real jobs, making use of a field quasi-experiment associated with the exercise of stock options for roughly 4500 managers in a large public company. In this company, option grants are set equally for all employees within occupational categories, and financial markets set the price at which the options are ultimately exercised. They assert that the considerable variation that they observe across employees and over time in profits from those sales is beyond the control of the individual employee and can be thought of as effectively randomized.

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