Study On The Effect Of Stock Option Incentive Plan Of Chinese Listed Companies

As a long time incentive system, Stock option incentive plan has been used to solve the principal-agent problem in many enterprises. It can motivate the managers in a long period and reduce the agency cost and moral hazard by combining the benefit of the corporation’s owners and managers.Stock option incentive plan is very complex and affected by many factors. This paper classified listed companies of China by industry and researched influencing factors in every industry. Stock option incentive plan is based on the premise of validity of securities market. This paper researched the relationship between corporation’s earnings per share and stock yield, in all the twelve industries, we found the significant positive relationship between earnings per share and stock yield in only two industries. From this point, we can say that the validity of Chinese securities market is very weak. This paper also researched influencing factors in corporations. Corporations of different industries are affected by different factors and the influencing extent of the same factor is different.This paper researched the relationship between shareholding ratio of managers and company performance. In the twelve industries, we found that there is a significant positive relationship between shareholding ratio of managers and company performance in agriculture, construction industry and information technology industry. In these three industries, company performance will be improved when shareholding ratio of managers rises. There is a cubic curve relationship between shareholding ratio of managers and company performance in mining and construction industry. Cubic curve can better explain the relationship between shareholding ratio of managers and company performance than line.