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Impact Of Dividend‐Protected Employee Stock Options On Payout Policies: Evidence From Taiwan

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  • Ming‐Cheng Wu
  • Erin H. C. Kao
  • Hung‐Gay Fung

Abstract

. This study used a sample of 1035 Taiwanese firms to examine the impact of dividend protected employee stock options on stock repurchase and cash dividend policies from 2000 to 2005. This study finds a positive relationship between cash dividends and executive options, implying that executives holding stock options might prefer to distribute cash dividends to boost the stock price. This result, unlike in earlier studies, arises from the dividend protected characteristic of Taiwanese employee stock options. Finally, free cash flow, firm profitability, level of debt, investment opportunities and firm size are found to considerably influence payout decisions.

Suggested Citation

  • Ming‐Cheng Wu & Erin H. C. Kao & Hung‐Gay Fung, 2008. "Impact Of Dividend‐Protected Employee Stock Options On Payout Policies: Evidence From Taiwan," Pacific Economic Review, Wiley Blackwell, vol. 13(4), pages 431-452, October.
    • Handle: RePEc:bla:pacecr:v:13:y:2008:i:4:p:431-452
    DOI: 10.1111/j.1468-0106.2008.00411.x
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    3. Ding, Chao & Ho, Choy Yeing & Chang, Millicent, 2021. "CEO and CFO equity compensation and dividend payout over the firm lifecycle," Global Finance Journal, Elsevier, vol. 49(C).

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