The adoption of stock option plans and their effects on firm performance during Japan’s period of corporate governance reform

Nobuhisa Hasegawa, Hyonok Kim and Yukihiro Yasuda

Journal of the Japanese and International Economies, 2017, vol. 44, issue C, 13-25

Abstract: This paper empirically investigates the adoption of stock option plans and their effects on firm performance in Japan. Using the sample of the period of corporate governance reform in the 2000s, we find that the adoption of stock option plans was more likely at firms in an industry where many firms had already introduced stock option plans. The result indicates a type of herding behavior among Japanese firms. We further find that firms rushed to grant stock options just before the adoption of the new accounting standard (ASBJ Statement No. 8). Unique to Japan, this standard requires stock option expensing only for newly granted options. We also find that operating performance decreased, but that payout and liquidity ratios remained almost constant after the adoption of stock option plans. Overall, the results do not support the view, at least in the Japanese context, that stock options can function as a primary incentive for improving firm performance.

Keywords: Stock option; Herding behavior; Accounting cost; Firm performance (search for similar items in EconPapers)
JEL-codes: G21 G32 G34 G35 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889158317300126
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:44:y:2017:i:c:p:13-25

DOI: 10.1016/j.jjie.2017.02.002

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().