Board Interlocks and the Adoption of Stock Option Pay

Publication Type

Conference Proceeding Article

Publication Date

8-2013

Abstract

This study investigates the effects of different types of director interlocks (sent and received ties) on the adoption of stock option pay among Japanese firms. Our findings show that sent ties are significantly related to the adoption of stock option pay whereas received ties are not, thus confirming our argument that managerial power and motivation of those who transfer information matter. The effects of sent ties are further strengthened by large foreign ownership and high levels of industry diffusion suggesting their complementary effects on managerial power. We also find that family ownership positively affects the impact of ties on the adoption of stock option pay. These findings suggest that information is not sufficient for the new practice to be adopted but that managerial and family power is important in the adoption decision.

Keywords

Board interlock, ownership, stock options

Discipline

Corporate Finance | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Proceedings

Identifier

10.5465/AMBPP.2013.11802abstract

Publisher

Academy of Management

City or Country

Lake Buena Vista

Link to Full Text

Share

COinS