The Study On Influence Of Listed Company' Incentive Stock Option Plan To Enterprise Earning Quality

Modern enterprise based on the separation of two rights will cause the principal-agent problem because of the conflict of interest and information asymmetry. This problem will be solved by giving the operators (agents) effective incentive and restraint. Thus, Incentive stock option System came into being, which is regarded as the second institutional revolution in the United States following the corporate system.The purpose of Incentive stock option Plan is to form a community of interest promoting enterprise performance improvement, while embodying the operators'revenue to the utmost extent. The revenue of the operators is realized and guaranteed by good corporate performance pushing share price, just because the stock market inherently has sensitivity of earnings. Therefore, the operators and investors pay great attention to the company's earnings, particularly under the premise of stock incentive. The surplus is not only an important exercise performance conditions for the option exercise, but also the safeguard to the operator achieving their own revenue. In recent years, emerging accounting frauds reveal a problem----the high profit figures conceal that the earnings quality is taken into considerations. In order to solve this problem, the company's surplus from previously focusing exclusively on the number has being gradually shifted into concerning both quantity and quality presently.The paper mainly researches whether the implementation of Incentive stock option Plan of China's listed companies will help enhance the company's earnings quality or not. Firstly, the results of relevant research and theory are reviewed. And Incentive stock option Plan's objective environment of the listed companies in China, the status of implementation of Incentive stock option Plan and the quality of corporate earnings in China are given to a comprehensive analysis. At the same time, the paper takes the empirical analysis on the present Incentive stock option Plan whether listed companies can help improve their performance. Based on the literature review, current situation analysis and empirical analysis of Incentive stock option Plan'impact on corporate performance, it proposes the hypothesis, and then builds regression model and uses SPSS17.0 to make a empirical analysis on the effect of Incentive stock option Plan on earnings quality under the premise of the weak valid stock market of China. The research results had proved the hypothesis and drawn the following conclusions:1, at present stage, to implement equity incentive scheme can not improve the quality of corporate earnings in our country; 2, the interval effect to the quality of earnings from Incentive stock option Plan does not exist. Finally, we propose how to improve the validity of Incentive stock option Plan of listed companies and give some policy recommendations to increase the effectiveness of the quality of corporate earnings.