Empirical Research On The Relationship Between Stock Options Incentive And Performance Of Listed Companies

Stock option incentive system started from the United States in the 1950 s. In order to solve the problem of lack of long-term incentive for the listed companies in China, stock option incentive is introduced into China. With the continuous improvement of the domestic capital market, China began to practice normative stock option incentive. There have been more than 100 listed companies in Shanghai and Shenzhen, starting the stock option incentive plans. Stock option incentive started to boom. Affected by the financial crisis in 2008, the stock price of listed companies fell, and companies operate hardly, even exercise price is higher than stock price, some companies were forced to terminate the incentive plan, the effectiveness of stock option incentive gradually began to be questioned.The empirical research studied the correalation between the stock options incentives and company performance through the data of listed companies in the implementation of stock options incetive from 2010 to 2013. Tobin’s Q value, ROE and the comprehensive performance scores as explained variables in this research.Through the analysis and comparison, enterprises can effectively improve the stock option incentive effect evaluation system, and offer several recommendations.Through the study,we can find the index of the price differnce between the exercise price and stock price effects the companies` performance positively.However, there is no big significance between the proportion of awarded stock option incentive and company performance. The impact of China’s current incentive effectiveness is mainly affected by the difference between the stock price and the exercise price. Based on the descriptive statistical analysis, that the present stage of implementation of stock option incentive award proportion are concentrated in0-2%, can explain why the stock option incentive didn`t show the relevance.In a conclusion, stock options incentives have a significant effect on enterprise performance of listed companies in China. And enterprises should choose the proper performance evaluation index according to the actual situation of their own,including shareholder shareholding ratio, capital structure, firm size and other aspects, appropriately raise the stock option grants ratio, and give the managers the better exercise price gains. Only in this way, the stock option incentives can get better and faster development in our country and the perormance can be raised.