Comparative Study On Stock Option And Restricted Stock Of Equity Incentive

With the phenomenon of the separation of corporate ownership and operation, tosolve the principal-agent problem and reduce agency costs has been an important issue toexplore in the domestic and international economic theory and practical circles. Theequity incentive is just an attempt to solve the principal-agent problem, by a certainnumber of shares granted to operators making it one of the business owner, and the ownerof "residual claim" to share, so that business consistent with the interests of the ownersreached a certain level. In this way, you can make the operators to pay more attention toshareholder value and more concerned about the long-term development of enterprises,so as to achieve the control agency risk, the purpose of reducing agency costs. Has beenin the last century to the present, the equity incentive has been made in the developmentof popularity. With the gradual maturity of China’s capital market environment andconditions, implementation of equity incentive the number of listed companies in Chinain recent years increasing steadily.Stock options and restricted stock are the two most important equity incentives listedcompanies in China selected, the number accounted for more than95%of all equityincentive plans. Different from the most domestic scholars’ objects of study, this articlecommitted to the comparative study of the stock options and restricted stock. On the basisof our equity incentive present implementation of stock options and restricted stock, thispaper firstly discussed the comparative analysis of them in theory, then using theempirical means to make assumptions and test the choice and economic consequencescomparisons of the two kinds of incentives. Firstly, through the establishment of alogistic regression model features listed companies in China selectable excitation modetest results show that: ownership concentration, executive compensation, capital structureand firm size are tendentious selection of important factors affect the listedcompanies. Secondly, for implemented stock options and restricted stock incentive plansof listed companies in2006-2010, the business performance before and after theimplementation of equity incentive are tested by using paired samples T-test results. Itshows that: the market response of implemented equity incentive plans is good, but forthe financial indicators within two years, there is no significant improvement. Finally, thepaper set the enterprise value as the dependent variable, the difference of the economicconsequences of the stock options and restricted stock through the establishment of amultiple regression model was tested, the results shows that: in the first two years afterthe implementation of equity incentive, the differences of economic consequencesbetween the stock options and restricted is not apparent. But in the third year, the differences of market reaction began to have significant differences in the extent of10%,and it shows that restricted stock is better than stock options. Based on the above analysisand results, the paper made the corresponding policy recommendations from three angles:design effective incentive programs, construction perfect manager market and establishefficient capital markets.