A Framework for the Accounting Determinants of Adopting Stock Option Compensation: Evidence from Egyptian Companies

  This study aims at proposing a framework for the accounting determinants of adopting SOC in Egyptian companies. This is done through empirically investigating the relation between company characteristics and the use of SOC. The study includes 64 Egyptian companies, which represent all different sectors at the Egyptian stock market. The study uses a panel data set, from year 2007 to year 2014, in order to enrich the analysis and account for unobserved heterogeneity. The researcher utilizes the binary log it regression model to define the determinants of adopting SOC. The results indicate that the determinants of adopting SOC in Egyptian companies are mainly: Company Size, Owner Dispersion, Human Capital Intensity, Tobin Q, Leverage and Sector Type. The study evidenced the prevalence of the Accounting based determinants compared to market based determinants in identifying the factors of adopting SOC. Furthermore, it was observed that there is a general tendency in the sampled Egyptian companies to use SOC as a remedy for some problems like weak monitoring, agency problem and negative consequences of 25th of January revolution. Finally, the results proved that SOC satisfied the roles that it was initially issued for, in terms of efficiency and effectiveness.