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Stock Options and Productivity: An empirical analysis of Japanese firms

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  • MORIKAWA Masayuki

Abstract

This paper analyzes the relationship between the use of stock options and productivity by employing firm-level panel data from the Basic Survey of Japanese Business Structure and Activities. According to the analysis, the use of stock options has a positive impact on firm productivity. Productivity steadily increases after the adoption of stock options. In addition, we found suggestive evidence that R&D investment increases after the introduction of stock options. These results imply that the deregulation on the use of stock options in 1997 and the subsequent legal reforms have had positive contributions to the productivity performance of Japanese firms.

Suggested Citation

  • MORIKAWA Masayuki, 2012. "Stock Options and Productivity: An empirical analysis of Japanese firms," Discussion papers 12011, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:12011
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    File URL: https://www.rieti.go.jp/jp/publications/dp/12e011.pdf
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    References listed on IDEAS

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    1. Roberts, Michael R. & Whited, Toni M., 2013. "Endogeneity in Empirical Corporate Finance1," Handbook of the Economics of Finance, Elsevier.
    2. Bulan, Laarni & Sanyal, Paroma & Yan, Zhipeng, 2010. "A few bad apples: An analysis of CEO performance pay and firm productivity," Journal of Economics and Business, Elsevier, vol. 62(4), pages 273-306, July.
    3. Katsuyuki Kubo & Takuji Saito, 2008. "The Relationship Between Financial Incentives For Company Presidents And Firm Performance In Japan," The Japanese Economic Review, Japanese Economic Association, vol. 59(4), pages 401-418.
    4. Coles, Jeffrey L. & Daniel, Naveen D. & Naveen, Lalitha, 2006. "Managerial incentives and risk-taking," Journal of Financial Economics, Elsevier, vol. 79(2), pages 431-468, February.
    5. Sadao Nagaoka, 2005. "Determinants of the Introduction of Stock Options by Japanese Firms: Analysis from the Incentive and Selection Perspectives," The Journal of Business, University of Chicago Press, vol. 78(6), pages 2289-2316, November.
    6. Katharine G. Abraham & James R. Spletzer & Michael Harper, 2010. "Labor in the New Economy," NBER Books, National Bureau of Economic Research, Inc, number abra08-1.
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    Cited by:

    1. Nikolay Naydenov, 2014. "Recent Trends in Japanese Corporate Governance," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 88-115.

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