We examine the impact of the cultural norm of uncertainty avoidance on employee stock option (ESO) exercise behavior using proprietary data from a multinational firm. We find that employees from countries with higher levels of uncertainty avoidance exercise their stock options earlier. These findings lend support to a maintained assumption in the ESO literature that employee attitudes toward uncertainty influence stock option exercise behaviors. Our findings further help to explain prior findings of cross-cultural differences in firms’ compensation practices by indicating that employee responses to option-based pay and firms’ consequent financial reporting costs vary as functions of employee uncertainty avoidance.
CITATION STYLE
Bova, F., & Vance, M. (2019). Uncertainty avoidance and the timing of employee stock option exercise. Journal of International Business Studies, 50(5), 740–757. https://doi.org/10.1057/s41267-018-0157-5
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