A study on the sensitivity of employee stock option price to changes in dividend yield

• Main Authors: Ang, Krizel Joy T., Dumlao, Jamie Rose B., Gonzales, Ian Dominic F., Suzuki, Mariane A.
• Format: text
• Language: English
• Published: Animo Repository 2016
• Subjects: Employee stock options > Philippines; Stocks > Prices > Philippines; Dividends > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/7259
• Institution: De La Salle University

Employee stock options are compensations packages offered to selected employees that allow them to buy the company's stock at a price lower than the market, making them shareholders. Because often overlooked, only a small amount of research exists about these particular derivatives in the Philippines. Using company data from the Philippines, Japan, and Singapore, this study is divided into two main objectives. First, to determine whether changes in dividends significantly affect the changes in employee stock option price, ordinary least squares and dynamic regression models were used. The other half of the paper, centered on determining which factors affect employee stock option issuance, made use of a multiple linear regression model. Results showed that there is a significant relationship between employee stock option price and underlying dividend yield. This paper was also able to determine which company performance factors are significant considerations looked into by firms when deciding to issue new stock options. The research is meant to be especially beneficial for Philippine companies with existing employee stock option plans or companies with eyes on implementing this type of incentive tool.