A Study of Stock Option and Firm Characteristics
Asian Tax Journal Vol. 1 No. 2 (2000), pp. 311-335
Abstract
The purpose of this study is to contribute to the introduction and development of Korean stock option. The study commences from theoretical review of stock option. This study focuses upon difference of financial firm-characteristics between the firms which adopted the stock option and the firms which did not. For study, accounting data were surveyed on those companies which have adopted the stock option in Korea until July 1999 and SPSSWIN package was used for data analysis. Ordinary income to sales, Debt ratio, Price book-value ratio(PBR), R&D to sales were selected for variables of firm characteristics. Results of analysis are as follows: First, the ordinary income to sales of firms with stock option is significantly lower than that of firms without stock option. Second, debt ratio of firms with stock option is not statistically different from that of firms without stock option. Third, PBR of firms with stock option is not statistically different from that of firms without stock option. Fourth, R&D to sales of firms with stock option is not statistically different from that of firms without stock option. In conclusion, the motive of adoption of stock option has been inferred as a future improvement of profitability or employee incentive against bad performance in the current period.
Keywords
- Stock Option
- Accounting for Stock Option
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