A Study On The Market Reactions Of Stock Incentive Of Listed Companies

Stock incentive plan origined in America in the 1950s, prevailed in western countries after the 1970s and have a fast development in the 1990s. Stock incentive plan have been applied to companies in China since 1993. however, there's no normative development until the debut of .The western experiences have proved that Stock incentive plan made a shared goal for shareholders and management so as to stimulate the management to work on behalf of the shareholders and society to the fullest. As to the listed companies, these effects will be manifested as stock price fluctuation.On the background of shares-trade reform being ended and guidelines being enacted and put in practice, this thesis selects the announcements of stock incentive drafts from the Shanghai &Shenzhen stock exchanges between 2006 and 2009. We uses the event-study methodology to study the market reaction of stock incentive announcements empirically. We find out that the market has significant positive responses of the stock prices to the publication of stock option drafts before and after the announcement. Futher, we find out that there are significant positive abnormal returns two days before the announcement day, which means that the stock option incentive information may be put it on the street before the formal disclosure. Besides, the market has significant negative abnormal in long run.And then, this paper goes a step further to analyze the factors which affect the reaction of abnormal return in both short and long run. Listed companies who meet the conditions below have better stock price performance in short term:①big-size revenue scale;②having higher investment value;③having promising future;④adopting stock option as incentive form. And in the long run, we find out that the earning capacity, stability of administration and stock incentive form have an influence in the stock price reaction.Lastly, the policy suggestions provided by this paper according to the study conclusions are as follows: Firstly, development effective capital market, standard the procedure of trading information disclosure to enhance the market efficiency, and control the disclosure time strictly. Secondly, drawing scientific and reasonable regulations. Thirdly, establishing a sound performance examinating system. Finally, enhance the investers'quality.