Study On The Effects Of Stock Option Incentive On Corporate Governance Performance Under The Background Of Full Circulation

The spontaneous Stock Option Incentive plan of companies in China dates back to the year before 2000, however, there's no regulated development until the formulation of . Meanwhile, with the full-circulation reform, state-owned shares and corporative shares are becoming circulative, enhancing the effects of stock option incentive as a corporate governance means. This paper explores the effects of stock option incentive on corporation governance performance under the background of full circulation.The empirical study of stock option incentive of listed companies in China mostly focus on the year before 2003, the research remain blank after the announcement of the Guidelines. This paper will explore the effects of stock option incentive based on the data since the effectiveness of the Guidelines in 2006.This paper will measure the comprehensive effects of stock option incentive by accounting study and event study. Under the new market background, the maximization of corporate value and the swift market reaction will be key considerations for companies; hence, the paper will measure not only the corporation performance effects but also the market reaction and the corporation market value fluctuation. When measuring the corporation performance effects, the paper will select key accounting indicators, as is used in traditional research method; as to the market reaction, the paper will use event study to measure.The results suggest that companies tend to have greater corporation performance after stock option incentive, however, the domination of state-owned shareholder and the defection of board-of-directors structure have negative effects, independent board of directors have limited supervision effects at current stage; the market reaction of stock option incentive is obvious, but half of the sample companies saw negative fluctuation of market value, which indicates the lack of market value management. Based on the above results, this paper makes strategic suggestions.The paper includes seven chapters: the research synthesis on stock option incentive at home and abroad; the summary of stock option incentive in China; the significance of full circulation background; the effects of stock option incentive on corporation performance; the effects of stock option incentive on corporation market value management; summary of the effects of stock option incentive; strategic suggestions.