2020 Fiscal Year Research-status Report
Non-executive Employee Stock Ownership, Corporate Governance, and Debt Pricing
| Project/Area Number |
18K01676
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| Research Institution | Hitotsubashi University |
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Principal Investigator |
文 敏鳴 一橋大学, 大学院経営管理研究科, 教授 (30792931)
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| Project Period (FY) |
2018-04-01 – 2022-03-31
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| Keywords | Non-executive Ownership / Corporate Governance / loan spread |
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| Outline of Annual Research Achievements |
At this stage, all the data collection and data analyses have been finished. The paper has been presented at a major international finance conference, annual meeting of FMA (Financial Management Association). The paper was selected as the semi-finalist for best paper awards. The paper has been accepted by Journal of Corporate Finance for publication consideration. The key finding of the current paper is to confirm that for US sample firms, we do observe the link between non-executive employee ownership and the terms and pricing of corporate loans. In particular, an increase in employee stock ownership is associated with a decrease in loan spreads and one fewer restrictive loan covenant.
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| Current Status of Research Progress |
Current Status of Research Progress
2: Research has progressed on the whole more than it was originally planned.
Reason
A complete paper draft has been submitted to the Journal of Corporate Finance for review. The paper has been accepted for publication consideration. The current analysis using US sample data only reveals that employee stock ownership may affect loan spreads by improving corporate governance, curbing managerial risk-taking, reducing information asymmetry, and improving employee retention. In addition, the sample of US firms has shown the results that employee ownership via stock options is associated with greater loan spreads, perhaps owing to their convex payoff structure. Overall, our results underscore the importance of the level and structure of employee ownership for pricing corporate loans.
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| Strategy for Future Research Activity |
At this stage, this project has completed the analyses simply based on US data. For the next step, this project aims to use Japanese-related non-executive ownership data and loan data to conduct further analysis. The project expects to compare the results based on Japanese sample firms with the findings that utilize US data as research sample. The outcomes of this project will make more significant contributions if an international-comparison analysis can be accomplished. In particular, this project intends to identify those unique characteristics of Japanese corporations and incorporate them into analysis.
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| Causes of Carryover |
In the past year, no international travel could be made to visit scholars for research collaboration. The budget amount that has been deferred will be effectively utilized for attending international and domestic academic conferences if the situation allows for travel. In addition, visiting the project collaborators is also considered in the budget plan.
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