Study On The Market Reactions Of Stock Incentive Of The State Holding Listed Company

Stock incentive plan origined in America, Since1980s,many companies all over the world have adopted it as an excitation to managers, and have be seen as an important solution method of principal-agent problem. In foreign countries, use stock incentive plan have improved enterprise performance greatly. Stock incentive plan have been applied to Chinese companied since1993, but there is no normative development until the promulgation of <Listed Companies Stock Incentive Guidelines (For trial implementation)> on January,2006.On the background of guidelines being enacted and put in practice, and market environment being improved gradually, then first reviewed the definition of the stock incentive, and analysised the special characters of the State holding listed company. Then choice the announcements of stock incentive drafts from Shanghai&Shenzhen stock exchanges between2007and2010.Use the CAR method of evevt-study methods to study the short-term market reaction of stock incentive announcements; and use the BHAR method to study the long-term market reaction of stock incentive implementation.The results indicate that our market has significant positive responses of the stock prices to the publication of stock incentive plan drafts before and after the announcement, but the stock incentive information may be leaked before the formal disclosure; and the result also indicate that the stock incentive in most the State holding listed company are failure in a long run, they don’t achieve the desired effect.Then, this paper analyze the factors which maybe affect the reaction of abnormal return in short and long run. The result show that:in the short term, the companies which having stronger debt paying ability, and having promising future can have better stock price performance; But in long term, the companies which having weaker earning capacity and debt paying ability and using executive stock option don’t achieve the desired effect.Lastly, this paper provided the policy suggestions according the study conclusions:Firstly, enhance the efficiency of the stock market; Secondly, establishing a science and reasonable performance examinating system; Thirdly, drawing a reasonable stock incentive plan; Finally, enhance the investers’ quality.