Font Size: a A A

Empirical Research On The Incentive Of Executive Stock Option Of Listed Company Based On Prospect Theory

Posted on:2010-02-19Degree:MasterType:Thesis
Country:ChinaCandidate:L ChenFull Text:PDF
GTID:2189360275982177Subject:Business Administration
Abstract/Summary:PDF Full Text Request
Executive Stock Option(ESO)is a kind of Long-term incentive system that companies had been using to encourage executives to work hard in the condition of the separation of ownership and control. But at the beginning of the 21st century since the accounting frauds of Enron and WorIdCom exposured , ESO had been encountered unprecedented suspicion and heckling. On the contrary, with the opening of policy, a number of mainland listed companies implemented the stock option incentive.Based on facts above mentioned, it's really necessary, we think, to reexamine ESO and make a prospective study of it for the purpose of standardization.Firstly, the thesis expound the traditional principal-agent theory, entrepreneurs and human capital theory and motivation theory in detail, which were the basis of ESO, analysed empirical incentive effects of ESO from the literature consultation. This thesis also introduced its intention, advantages and disadvantages of ESO. Secondly, according to prospect theory, this thesis introduced behavioral hypothesis as the basis of theory hypothesis. Furthermore, by choosing research samples of enterprises that had applied ESO from year 2007 to 2008 randomly, this thesis made an empirical research by establishing a model with measurement economic method.Finally, the theoretical assumptions of inspection, to a certain extent, were confirmed by the relevant financial indicators of the listed companies in China. In management of equity incentive system, there were significant features of managers'behavior. It shows the features of risk aversion when the stock prices higher than the exercise price ,the stock prices higher than the exercise price ,the more obvious features of risk aversion, while stock option plan could prompt managers improve enterprise performance. At the last,according to the listed companies in China implemented the executive stock option incentive problems, proposes the corresponding countermeasure and the suggestion.
Keywords/Search Tags:Executive stock option, Prospect theory, Behavioral economics, Degree of financial leverage, Assets-liabilities ratio, Net profit growth rate
PDF Full Text Request
Related items