Publication Type

Journal Article

Version

acceptedVersion

Publication Date

7-2016

Abstract

We investigate why Japanese firms have adopted executive stock option pay, which was developed with shareholder-oriented institutional logic that was inconsistent with Japanese stakeholder-oriented institutional logic. We argue that Japanese managers have self-serving incentives to leverage stock ownership of foreign investors and their associated institutional logic to legitimize the adoption of stock option pay. Our empirical analyses with a large sample of Japanese firms between 1997 and 2007 show that when managers have elite education, high pay inequality with ordinary employees, and when firms experience poor sales growth, foreign ownership is more likely associated with the adoption of stock option pay. The study shows the active role of managers in facilitating the diffusion of a new governance practice embodying new institutional logic.

Keywords

corporate governance, institutional logic, foreign ownership, stock option pay, practice adoption

Discipline

Asian Studies | Corporate Finance | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Strategic Management Journal

Volume

37

Issue

7

First Page

1472

Last Page

1492

ISSN

0143-2095

Identifier

10.1002/smj.2391

Publisher

Wiley: 24 months

Additional URL

https://doi.org/10.1002/smj.2391

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