stock options, reporton optiongrants atold economyand
new economy firms from 1993 to 2001. Figure 11.2
summarizes their findings.
FIGURE 11.2Option Grants by Sector
Source:Hall and Murphy (2003).
Thedifferencesacrosssectorsmaynotbesurprising,butitis
worthexaminingwhytheyexistinthefirstplace.Ingeneral,
we can outline three factors that may explain these
differences:
- Age and growth potential of firm. We would expect
youngerfirmstouseequityoptionssubstantiallymorethan
olderandmorematurecompanies.Afterall,ifnothavingthe
cashtocompensateemployeesisafactorbehindtheuseof
equityoptions,youngerfirmsarefarmorelikelytobecash
constrained than more mature firms.