Moreover, even if it were established that options increased risk taking, it is not clear whether such an outcome would be desirable or undesirable from the perspective of the shareholders. Risk-averse managers, who hold disproportionate amounts of their financial and human capital in the companies they manage, are likely to take fewer risks than are optimal. This is an agency problem that is likely magnified in companies where top executives enjoy substantial rents from their positions, and have strong incentives not to take risky actions that may get them removed from their positions. Thus, not only do we not know whether stock options.
