Manager Power And The Effect Of Stock Options Incentives

Equity incentives as an important mechanism of corporate governance, management and shareholders by making profit sharing, risk sharing, management can effectively alleviate the problem of conflicting interests with shareholders. With the split share structure reform of the smooth implementation of the listed companies in China began implementation of norms of equity incentives. However, on the effectiveness of the equity incentive empirical research in China but there is great difference, but most of the existing research in the principal-agent framework to start the manager did not consider the role of incentive contract design. Listed Companies in China based on the status of the implementation of equity incentive, the paper highlights the power of management equity incentive effect to 1 January 2006 to December 31,2009 Shanghai and Shenzhen stock option incentive plan announcement listed companies with the draft samples to study the power of managers to the effectiveness of incentive stock options impact.First, we use stock options from corporate motivation and incentive effects of stock options on both domestic and foreign research results were reviewed, we found that some companies use for incentive stock options is not considered and scholars on the stock options incentive effects of the research findings are not the same. In order to investigate the power of managers to the effectiveness of incentive stock options, the paper built on the theoretical perspective of managers of power analysis framework, and were the source of power from managers, managers gain access to power means the power of stock options and managers incentive effects are described. In dispersed ownership, internal directors are more part-time general manager and executive chairman of the board serve longer the case, the power of managers is relatively large. Compared with those with greater power management provides the conditions for the implementation of rent-seeking behavior, managers have the opportunity to obtain excess returns by the power, of which the most important way to influence the design of incentive contract the board, and power compared to smaller managers, with great authority on stock options managers have the ability to influence the design of the program, they realize their own interests to maximize the transfer of stock options of listed companies into the interests of management tools, can not effectively play the role of incentives.Secondly, based on the above empirical analysis, the use of listed companies reported stock option market reaction to the draft plan, the window period excess stock market returns of listed companies to measure the incentive intensity of stock option programs, higher rate if the excess return, then the investors expect stock option program will motivate managers to work hard to enhance corporate performance, if the excess return is low, it indicates investors expect a lower incentive stock option program, or do not have the incentive.In addition, the paper selected dispersed ownership, the two long-serving staff and executives, one of three indicators to describe the power management features, if dispersed ownership structure, two jobs of chairman and general manager of one, the chairman or general manager in the company Prior to his current position both the IPO, then the greater the power of managers. The empirical analysis, we found that managers of power and incentive stock options was a significant negative correlation, the greater the power of enterprise managers, stock options, the lower the incentive program. This is expected to prove the theory, when the managers greater authority, the manager the ability to influence the design of Stock Options, easily achieved by setting the right conditions for the line to expand the stock options granted to management to make stock options quantity channel managers to seek their own interests, reduce the incentive stock options.Finally, the thesis of the theory and practice community of revelation, and pointed out the inadequacies of the paper and the direction for further research.