OWNERSHIP STRUCTURE AND OPERATING PERFORMANCE CHANGES SURROUNDING STOCK OPTION ADOPTIONS: EVIDENCE FROM JAPAN

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Konari Uchida, Mamoru Matsumoto

DOI:10.22495/cocv4i2p1

Abstract

Stock option adoptions by IPO firms account for about one-third of Japanese stock option adoptions during 1997-2000. Non-IPO firms that adopt stock options tend to decrease financial institutions’ ownership levels less than the average whereas reduce other corporations’ ownership levels more than the average. The result suggests firms that care more about shareholder wealth decrease cross-shareholdings as well as issue stock options. However, such firms need to keep shareholdings by financial institutions to prevent increases in agency costs of debt. Finally, we do not find a significant change in firms’ operating performance surrounding stock option adoptions.

Keywords: Stock Option, Ownership Structure, Operating Performance, Agency Costs of Debt, IPO

How to cite this paper: Uchida, K., & Matsumoto, M. (2007). Ownership structure and operating performance changes surrounding stock option adoptions: Evidence from Japan. Corporate Ownership & Control, 4(2), 10-23. http://dx.doi.org/10.22495/cocv4i2p1