2021 Fiscal Year Research-status Report
Non-executive Employee Stock Ownership, Corporate Governance, and Debt Pricing
| Project/Area Number |
18K01676
|
|---|
| Research Institution | Hitotsubashi University |
|---|
Principal Investigator |
文 敏鳴 一橋大学, 大学院経営管理研究科, 教授 (30792931)
|
|---|
| Project Period (FY) |
2018-04-01 – 2023-03-31
|
| Keywords | Non-executive Ownership / Corporate Governance / Loan spread |
|---|
| Outline of Annual Research Achievements |
Following from the previous stage, at this stage, all the data collection process has been completed and significant results have shown the relationship between non-executive employee ownership and the terms and pricing of corporate loans. The paper has shown a negative effect of employee stock ownership on loan spreads suggesting that employee stock ownership may affect loan spreads by improving corporate governance, curbing managerial risk-taking, reducing information asymmetry, and improving employee retention. Results are summarized and a final draft has been finished and submitted to the Journal of Corporate Finance.
|
| Current Status of Research Progress |
Current Status of Research Progress
1: Research has progressed more than it was originally planned.
Reason
The project has been pursued well and the results have made significant contributions to the literature. The results shown in this project remain significant when we use within-firm variation and perform an analysis with instrumental variables based on demographic characteristics to address the concerns of endogeneity. In terms of the effects of employee ownership via stock options, it is associated with greater loan spreads, perhaps owing to their convex payoff structure. Overall, the results underscore the importance of the level and structure of employee ownership for pricing corporate loans. The paper written based on this project has been accepted for publication in the Journal of Corporate Finance.
|
| Strategy for Future Research Activity |
Though the paper has been published, it can also be presented in some seminars held by different academic institutions to promote the research topics and seek the possibility for future research focusing on Japanese firms. For Japanese firms, this project has intended to collect the data on ESO plans from the Survey of Current Status of Employee Stock Ownership compiled by National Conference of Stock Exchanges and Tokyo Stock Exchange. Different from the database for the US firms, Nonexecutive ownership data for the US firms can be extracted from Form 5500 database filed with the US Department of Labor, required by Employee Retirement Income Security Act. Form 5500 database is accessible to the public since 1990.
|
| Causes of Carryover |
Due to the limitations on international travels, attending the international conferences has been put on a hold. For the coming year, if travel restrictions have been lifted, research fund is planned mainly for travel purpose to visit the collaborators and present the paper to enhance the visibility of this project.
|
