An Empirical Analysis Of Stock Option Impact On Firm Value

Stock Option incentive is to enable operators to think from the standpoint of the owner, an incentive system can achieve joint development of owners and operators, and its essence is a contractual arrangement between shareholders and executives under asymmetric information. The purpose of implementation of stock option, is to solve the conflict of interest between shareholders and executives, reducing agency costs, thus improve the value of the enterprise. Obviously, the higher value of the enterprise, the higher the capability of the enterprise to return to its stakeholders. In this paper, with the empirical research about the89listed companies which implemented stock option incentive from2008to2012as the final sample of the study, conducted empirical research for the implementation of China’s listed companies to give a reference for China’s listed companies, on the relationship between the stock option incentive and the value of the enterprise.This paper is divided into two parts, the first part is the basis the theory of the stock option incentive and the value of the enterprise, summarizes the related domestic and foreign researches about stock option incentive, explains the stock option incentive and the value of the enterprise, and describes the relevant theoretical knowledge, specifically including Agency Theory、Two Factor Theory Hygiene-motivational Factors、Human Capital Management. The study of incentives affect the value of enterprise has laid a good foundation for the theory of executive stock option incentive empirical analysis.The second part is empirical research, is the core part of this article, is the empirical research on the relationship between executive stock option incentive and the value of the enterprise. Selected89listed companies which implemented stock option incentive from2008to2012as sample in this analysis, set up three research model, in-depth analysis of the relevant factors affecting the value of the enterprise.According to this study, there are several major conclusions. First, the manager’s stock option compensation and Tobin’s Q do not show any significant relation. The proportion of stock option compensation and corporate value is not existence a linear relationship. It can’t response the linear on the firm value. Second, the relationship between the executives’stock option and the firm value is not existence non linear. China has not yes formed manager market, contains manager selection, evaluation and constraints. So managers are not properly evaluated the results, it is difficult to consist with the interests of shareholders. In the imperfect market mechanisms, the implementation of stock option is difficult to play the role of an incentive. Third, in different capital structure, the ownership dispersion has little effect on the firm value. However, in the special operator business enterprises, manager’s stock option compensation has significant impact on the firm value. In addiction, Debt Asset ratio, Earning Per Share, the value of beta are most important factors on the firm value for China’s listed companies.