International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Executive Stock Option and Blockholder Ownership as Governance Mechanisms on Firm Performance
Ahmad Ibn Ibrahimy, Rubi Ahmad, Mohamed Albaity

Separation of ownership and control led to agency conflicts between the majority and minority shareholders in South East Asian Corporations. Using panel data pooled GLS estimations, this study investigates the effects of Executive Stock Option (ESO) granting and blockholder ownership on firm performance of Malaysian non-financial listed companies. A positive significant increased relationship between ESO granting and firm performance is found which conform incentive alignment hypothesis, coupled with the modest effect of blockholder ownership while considering both market and accounting based performance measurements. These explanatory variables are in tandem with the enhancement of future revenues by alleviating the conflicts between shareholders and managers of Malaysian firms. The low positive relationship is indicating the blockholder ownership as a monitoring device that has modest power. Additionally, industry effects on firm performance also been observed.

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