This paper examines employees' trading of own-company options. Using data from Finland, I show that employees' direct and indirect purchases of call options represent 4%-14% of aggregate retail option volume. These purchases contain price-relevant information: weekly returns on the underlying stocks are approximately 50 basis points. The informativeness is most evident before earnings announcements, extends to firms in the employer's supply chain, is not driven by industry knowledge, and disappears upon job separation. Consistent with prospect theory, employees who experience recent losses in their stock portfolios are more willing to exploit their information advantage by trading own-company options.
I am a PhD candidate in Finance at Aalto University.
I hold a MSc in Finance from Bocconi University and a BSc in Economics and Business from LUISS Guido Carli, both cum laude.
Prior to my doctoral studies, I worked in the financial industry in the UK (Corporate Equity Derivatives at Morgan Stanley) and in Italy (Generali, Assilea).
I also co-manage a website promoting financial literacy in Italy.
In my research, I focus on the decision-making of retail investors, in particular employees and executives.
I am on the job market in 2023-2024. For my CV, please click here.
Job Market Paper
Insider Trading With Options
Diversification at Work: Evidence From Employee Stock Options
Utilizing granular data on direct stock holdings, I examine how portfolio considerations influence the decisions of employee stock option (ESO) grantees. I find that employees who are less exposed to employer-specific risk due to their holdings in other listed companies tend to hold their options longer than other employees. This behavior is especially pronounced when employer-specific risk is harder to diversify. The decisions of ESO grantees are also affected by exogenous changes in stock market participation that make investments in other companies more salient. Overall, my findings support the long-standing hypothesis that outside wealth shapes the behavior of ESO grantees.
Panic Herding: COVID-19 Experiences and the Interpretation of Earnings News
This paper examines how local experiences of the COVID-19 pandemic affect sell- side analysts’ interpretation of earnings news. By exploiting the variation in the intensity and timing of local outbreaks, I show that analysts who are more exposed to the virus tend to herd more closely with the consensus forecast. However, I find no evidence of increases in forecast pessimism. The data are consistent with the intensity of exposure to the pandemic having a first-order effect on analysts’ risk attitudes, rather than on the bias of their stated expectations.
Reproducibility in Management Science
(As member of the Management Science Reproducibility Collaboration)
With the help of more than 700 reviewers we assess the reproducibility of nearly 500 articles published in the journal Management Science before and after the introduction of a new Data and Code Disclosure policy in 2019. When considering only articles for which data accessibility and hard- and software requirements were not an obstacle for reviewers, the results of more than 95% of articles under the new disclosure policy could be fully or largely computationally reproduced. However, for almost 29% of articles at least part of the dataset was not accessible for the reviewer. Considering all articles in our sample reduces the share of reproduced articles to 68%. The introduction of the disclosure policy increased reproducibility significantly, since only 12% of articles accepted before the introduction of the disclosure policy voluntarily provided replication materials, out of which 55% could be (largely) reproduced. Substantial heterogeneity in reproducibility rates across different fields is mainly driven by differences in dataset accessibility. Other reasons for unsuccessful reproduction attempts include missing code, unresolvable code errors, weak or missing documentation, but also soft- and hardware requirements and code complexity. Our findings highlight the importance of journal code and data disclosure policies, and suggest potential avenues for enhancing their effectiveness.
Why Do Retail Option Traders Lose Money?
(With Aleksi Pitkäjärvi)
Status: Work in progress