The Effect Of The Stock Option Plans On Corporate Investment Behaviors

The remarkable feature of the modern enterprise system is the separation between ownership and right of control. The key which the modern enterprise system operates effectively is how to incent and restrict managers of enterprises so that the interests of managers and shareholders will converge. Among different kinds of incentive and restraint mechanisms, equity incentive mechanism has its unique superiority and is praised as a "golden handcuffs".On December 31,2005, the CSRC issued "Provisional measures on the equity incentives in the listed company." It makes the equity incentive of china have laws and regulations to follow. Subsequently, the measure about implementation of equity incentive in State Holding Listed Companies was promulgated in 2006 and a series of notices and memos about equity incentive was issued in 2008. From then on, the equity incentive of listed companies in our country ushered in a new stage of development. China, the world’s second largest economy, the ownership structure has been transformed from single state-owned to diversify the ownership structure and investment becomes more diversified. On the one hand, the phenomenon which includes over-investment, wasting of resources and excess capacity occur in some industries. On the other hand, the investment of industries which include culture, agricultural, environmental protection and high-new technology is not enough. Therefore the phenomenon of over-investment and under-investment is objective existence in our country.The sample data of this paper is picked from China’s A-share listed companies during 2009-2012. We study that equity incentives make the influence of the investment behavior of listed companies in our country by adopting the combination of norms and empirical research methods. This paper first summarized the study results on the equity incentives and investment behavior. Then the paper expounds theoretical basis, equity incentives pattern and key points on the implementation of equity incentive. Next, we introduce the present situation of equity incentives in our country and analysis the impact on investment behavior of listed companies of our country by implementing equity incentives. Based on the above analysis, we established the research assumptions. The empirical results show that the implementation of equity incentive can help companies to restrain over-investment and under-investment. In addition, we find that the proportion of under-investment is higher than the proportion of the over-investment in Chinese listed companies under the background of economic environment and national policy. In the end, we provide some useful policy suggestions.