The Short- and Long-Term Performance Effects of Implementing Executive Stock Option Compensation Programs

Abstract

In this introductory chapter, the reader will gain a deeper insight into executive compensation, stock options, and the impact an executive’s risk-taking behaviour has on a firm’s performance. ‘1.1 Background’ provides an expanded rationale on the importance of this thesis. ‘1.2 Purpose and Problem Area’ discusses the contextual landscape in which stock options exist, what the current literature has yet to define and how this thesis aims to address some of these problematic areas. ‘1.3 Structure of the Thesis’ familiarises the reader with the two-sided analysis (short- and long-term) used to answer the research questions. ‘1.4 Research Questions and Expected Results’ expands upon the purpose and problem area, constructing the hypothesis, and finally presenting the expected results. Finally, ‘1.5 Scope’ clarifies the criterion used to narrow down the problem area for this study.