Executive stock option, corporate governance and value of the firm: Facts and fiction of Malaysian non-financial listed companies

Ownership structure is important in determining a company’s objective, increasing shareholders’ wealth and discipline of managers. In other words, ownership structure and the separation of ownership and control is the heart of corporate governance area. This paper looks into Executive Stock Option (ESO) granting of Malaysian non-financial companies as a corporate governance mechanism designed to reduce agency problem, thereby increasing firm value. The period of study covers from 2002 until 2008 to test the effects of ESO granting on firm performance while considering both market and accounting based performance measurements. Both univariate and multivariate panel data fixed effect regression models revealed a significant positive relationship between ESO granted and value of the firm for the years next to the years of ESO granting occurrences