Abstract
Stock options are theoretically adopted to better align the interests of the managers and shareholders, thereby reducing agency costs, and consequently increasing corporate performance. The critical question is whether stock options have this impact in practice. Consequently, this study investigates if stock options attribution has impact on corporate performance of Portuguese listed firms on the Euronext Lisbon. The results suggest that stock options grant is negatively related with firm's performance. Hence, this study corroborates the rent extraction hypothesis, the crowding-out hypothesis and the multi-tasking effect, which suggest that stock options may affect adversely firm's performance.
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