Stock Option System Issues Related To Research

Since the mankind has invented the modern enterprise system, it has been the eternal theme that how to encourage and restrain the agents to reduce the issue of agent cost. The incentive system of the stock option is thought to be the greatest invention of the 20th century.The incentive stock option is the right to offering to managers and employees by the enterprise's owners, to buy a certain quantity of company's stocks in a designated period with a designated price which is called the exercise price. when the stock market price is higher than the exercise price, the holder of the incentive stock option conducts the right and obtain the stocks of the company, or gain the difference price between the stock market price and the exercise price.On the contrary, when the stock price is lower than the exercise price, the holder of the incentive stock option can abandon the right of conducting and has no loss at all.That is to say , for managers and employees, this kind of system is a good deal. As far as the company is concerned, stock option makes it possible for the company to start undertaking with little outflow of the company's cash flow, thus saving the cost of the company and being benefit for the improvement of competition.So the incentive stock option is a "two-win" tactic.After the company awards the incentive stock option, the beneficiary will work hard to promote the stock price in order to execute the option , in this way, company stock price will get higher than the ecercise price, the company shareholder's wealth increases too at this moment.The stock option has the internal function to encourage the beneficiary to work hard, so it can save the cost of outside supervise and thus reducing the transaction cost of the enterprises. Because this kind of system generally stipulates a 3- 10 waiting year. The beneficiary cannot conduct the option during the waiting periods, And the interests at the stock option can be realized. So the stock option can prevent talents from slipping away easily, so it is also called " gold handcuffs " vividly by people.But since it is the " gold handcuffs ", it is unavoidable to prevent the impulse of people from taking off the " gold handcuffs ",to make " gold necklace ". Afer the incident of Enron, greedy story of senior executives have been performed one after one in Wall Street. Magazine has also listed the most 25 greedy senior executives in U.S.A., The incentive stock option in U.S.A. is turning to the symbol of manager abusing and corroding the wealth of shareholders. Senior executives handle the financial statements for promoting stock price, and condut the option, sell the stocks, obtain enormous profits, but shift all agonies to medium and small investors in weak information. The stock option is demonstrating the new moral risk.Because of disregarding the cost in stock option, enterprises grant the stock option like handing out candies and engulf the medium and small stockholder's benefits. Moreover,Microsoft abandoned the stock option and switched to grant the restricted stock.The system of incentive stock option has encountered the unprecedented trust crisis in U.S.A..Then, what kind of role has stock option been really acted in this fake financial affairs? Has the long-term incentive system which is thought as bundling interests of managers and shareholders together switched to the tool which makes executives pay close attention to the soar of the short- term stock price and eventually, do harmful to interests of shareholders?Will the expensing of stock options become a kind of irreversible trend ? Have the expensing of stock options reflected the essence of this system? Does Microsoft giving up stock option mean the end era of incentive stock option? Is the incentive stock option worth continuing to pursue in China? In order to make an answer to the above-mentioned problems, this paper includes four parts according to the following logic:In the first part, by the discuss of the basic conception of the incentive sto...