A Study of Stock Options in the Philippines using the Two-Step Analysis Model

• Main Authors: Ang, Jennifer Rose B., Capili, Eunice Claire A., Huang, Christine Dina C., Sese, Jhoana Marie E.
• Format: text
• Language: English
• Published: Animo Repository 2012
• Subjects: Options (Finance); Employee stock options; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/10795
• Institution: De La Salle University

This study determines the relationship and effect of tax benefit, as represented by deferred tax assets, with the stock options. This study also determines the relationship and impact of stock options with the following profitability ratios: earnings per share, return on asset, return on equity and net profit margin of the company. The deferred tax asset for share-based payments tends to influence managements decision to issue stock options to its employees through its effect on the company's tax expense and net income. Profitability ratios use net income in its computations. The data used were obtained from the SEC form 17-A of the respective publicly listed companies found in the Philippine Stock Exchange library and on the official websites of the companies. A two-step analysis was applied to analyze the data in this study. Panel analysis was done in order to determine which model among OLS, FEM and REM would be the appropriate model. Multiple linear regression, on the other hand, was used to test the significance of the relationship between the independent and dependent variables. The findings show that tax costs have a significant effect on the issuance of stock options. In addition, results indicate that the issuance of stock options has a significant impact on return on equity and earnings per share but has no significant impact on return on asset, and net profit margin.