Listed Company Stock Option Incentive Effectiveness Research In Hunan Province

In 2006, listed companies in China basically have completed the reform of tradable shares, along with the gradual improvement in the conditions of China’s legal system, the environment of capital market and the corporate governance structure of listed companies become better, more and more listed companies are choosing to implement stock option incentives. Stock options have a strong incentive to encourage managers to work harder and try to fight for the profit of the company. Up to now, among the listed companies’ which have stock option incentive policy, it indeed enhances the performance of listed companies contributed, which is theoretically proved scholars, but also verified the reality. But the studies take all listed companies to implement in our country as sample. Whether these results in other areas are the same? Therefore, it is very meaningful to choose a certain area of listed companies as a sample to examine whether stock option policies can also promote the profits of listed companies.Based on the research results of the domestic and foreign scholars, this essay chosen all listed companies which have practice stock option policy during 2006 to 2013 in Hunan Province. It selects the ROE and net profit(hereafter NP) as a measure of performance of listed companies. Let the efforts of incentive stock options as independent variables, it includes two variables, namely the proportion of the main incentive and equity market value of equity incentive. There are four control variables; they are company size, debt ratio, ownership structure and independence the proportion of directors. A multiple linear regression model is done to analyze the relationship between stock options and performance of listed companies. The empirical results found that there is a significant positive correlation between the strength of the stock options and ROE and NP. It illustrates that the stock options policy can benefit the list company.On the basis of empirical research, and take the reality into consideration, the paper tries to put forward some relevant proposals, mainly from the two aspects. On the one hand, from the perspective of a listed company, they should be based on their specific situation rationally to decide whether implement incentive stock options policy or not. At the same time, they should optimize the vesting conditions of stock options, and make the company’s internal governance better. On the other hand, from a macro perspective, the government should create a good environment for listed companies to implement the stock option incentive policies. And it also should strengthen supervision to ensure that the behavior of listed companies legal and reasonable.