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Determinants of stock option use by Japanese companies

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  • Konari Uchida

Abstract

Japanese data show a negative relation between leverage and the probability of firms' use of stock options. Such a relation is more marked for firms affiliated with specific keiretsu or main banks. This evidence reflects the fact that Japanese companies are more reliant on debt financing and that the agency cost of debt is a central issue in corporate governance. Results show that the frequency of the firms' use of stock options is positively associated with firm size. Finally, independent firms, which reveal more concern about shareholder wealth, are more likely to use stock options.

Suggested Citation

  • Konari Uchida, 2006. "Determinants of stock option use by Japanese companies," Review of Financial Economics, John Wiley & Sons, vol. 15(3), pages 251-269.
    • Handle: RePEc:wly:revfec:v:15:y:2006:i:3:p:251-269
    DOI: 10.1016/j.rfe.2005.08.001
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