Research On Opportunistic Behavior Of The Management Of Listed Companies

The modern enterprises are characterized by separate ownership and control rights,they are faced with how to alleviate the problem of principal-agent relationship. Somescholars think that client can design appropriate compensation contract terms, whichcan reduce the opportunism behavior of agent. The incentive mechanism of stockoption as a kind of long-term mechanism, not only beneficial to balance the conflictof long-term benefits and short-term benefits and guarantee between management andshareholders to have consistent interests so as to reduce the happening of the problemof agency, but also is beneficial to improve the company’s long-term operatingperformance, so in the world within the scope of mass. However, some people holdthe negative views about the stock option incentive, argues that managers use hispower and information advantage and turn stock option incentive into a means ofself-interest. On the one hand, managers relay on the power of the compensationcommittee impact of the conditions, quantity and time of stock options granted. Onthe other hand, they also choose the timing of information disclosure to reduce thecost of stock options.This paper chooses the197listed companies, which implementation of stock optionincentive from the year2006-2012as research samples. We investigate whethermanagers manage the timing of stock option awards. We find a significant differencebetween the pre and post-award periods, awards are preceded by insignificantlynegative abnormal returns and followed by significantly positive abnormal returns.The reasons why this return pattern is that the managers delay announcements of goodnews and rush forward bad news. Such a disclosure strategy ensures that decreases inthe firm’s stock price related to the arrival of bad news occur before, rather than after,the award date, while stock price increases related to the arrival of good news occurafter, rather than before the award. This paper also studies the two pricing methods,whether more affects the behavior of managers’ self-interest. We find that cumulatedabnormal returns display an obvious trend of restraining before awarding date andthen rising after the awarding date. But the interval pricing method compared withdaily pricing method before the draft announcement is significantly negative, and itsprice is low of the30trading days prior to the draft announcement, therefore, intervalpricing method compared with daily pricing method is more maximize their stockoption compensation. We by investigating the stock option incentive plan in the listed companies whether exist the timing of stock option awards. Our finding suggests thatwith information asymmetry and the drive of strike pricing rule, more agency costsare produced. They will make a contribution to our country government regulators formaking stricter disclosure rules.