141918367 Executive+Compensation+and+Firm+Performance+in+.pdf (293.28 kB)

Executive compensation and firm performance in New Zealand: The role of employee stock option plans

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journal contribution
posted on 30.03.2021, 12:44 by Kuan Yong David DING, Ya Eem CHEA

We examine the role of employee stock option plans (ESOPs) in mitigating agency problems in New Zealand firms. We find that ESOPs have a significant and positive effect on firm performance relative to their non-ESOP counterparts. This relation appears within a year from the first ESOP announcement, and for two to four years after the announcement. Our results show that ESOPs improve corporate performance by 10 times the cost of the ESOPs’ adoption in the first year of issue. The improvement persists for four years after the first issuance. These findings confirm the effectiveness of employee stock option plans for companies issuing ESOPs compared with companies that do not issue ESOPs, and show how much the value creation of ESOPs contributes to these firms.

History

Publication Date

11/01/2021

Journal

Journal of Risk and Financial Management

Volume

14

Issue

1

Pages

1-19

ISSN

1911-8066

School

Lee Kong Chian School of Business

IRIS ID

141918367

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