Abstract
Ownership structure is an imperative factor in determining firm objectives, increasing the shareholders' wealth and disciplining the executives. Our study looks into the effectiveness of yearly executive stock option (ESO) granting as a corporate governance mechanism designed to reduce agency problems, thereby increasing firm value. Using fixed effect panel data analysis, we found a significant positive relationship between ESO granting and firm value in the presence of concentrated ownership in Malaysia. This relationship is significant for the years next to the years of ESO granting occurrences while considering both market and accounting-based performance measurements. Additionally, based on firm-size, we also found a significant difference of ESO granting of Malaysian non-financial firms.
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