Pendleton, A and Robinson, A orcid.org/0000-0002-1369-2718 (2021) Why walk away from an easy gain in wealth? Evidence from a UK stock option plan. Journal of Behavioral and Experimental Finance, 31. 100539. ISSN 2214-6350
Abstract
The paper examines the extent and potential reasons for non-exercise of ‘in the money’ stock options, drawing on employee-level data from the UK Save-As-You-Earn stock option plan. 14 per cent of participants choose not to exercise, and failure to exercise in these circumstances can be costly in terms of foregone increases in wealth. Lesser experience of the option plan, perceived lack of financial knowledge, and greater reliance on friends for advice is associated with failure to exercise. These findings offer challenges to the use of sophisticated reward and benefit schemes by companies when potential participants lack financial capabilities, and add to the literature by showing that financial literacy can remain problematic even when employees have surmounted initial obstacles to joining plans.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2021 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). |
Keywords: | Stock options; Financial participation; Financial literacy; Savings |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 16 Jul 2021 10:47 |
Last Modified: | 25 Jun 2023 22:42 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jbef.2021.100539 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:176242 |