The Nature Of Controlling Shareholders,the Associated Non-executive Director And The Incentive Effect Of The Executive Stock Option

Manager stock option incentive system is an effective method to deal with long-term incentive problems.The system has been widely used in many Western countries,and China's practice of incentives for managers' stock options started relatively late.In 2006,the “Administrative Measures on Equity Incentives” promulgated by the China Securities Regulatory Commission,and the “Trial Measures for Incentives for Executive Stock Option of State-controlled Listed Companies(Domestic)” issued by the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance cleared up the implementation of stock option incentive plans for listed companies in China.Obstacles at the same time led to the upsurge of the listed company's implementation of stock option incentives.However,the listed company's equity structure and governance structure need to be improved,the issue of state-owned listed companies with excessively high agency costs still exists,and the design and implementation of their plans are vulnerable to management control,which raises issues such as moral hazard and adverse selection.The implementation of stock option incentives in listed companies is an important way to solve the agency conflicts in listed companies.However,the existing literature studies on incentives for managers' stock options focus on discussing the process of stock option incentives and the wealth effects they generate.However,the research on the effects of listed companies and board of directors on the characteristics of company stock option incentives has also been compared less.In this context,the study of the nature of controlling shareholders and the influence of non-executive directors on the incentive effect of managers' stock options has a strong theoretical and practical significance.This paper takes the A-share listed company that implemented the executive stock option incentive plan from 2006 to 2015 as a sample,and empirically examines the influence of the controlling shareholder nature and the non-executive director governance on the incentive effect of managers' stock options.Explore whether there are differences in the effect of the implementation of stock option incentives between state-controlled listed companies and non-state controlled listed companies? And whether there are differences in the influence of the affiliated non-executive directors' governance on the incentive effect of stock options in two listed companies with controlling nature? This article first reviews the research status at domestic and abroad,and then summarizes the basic theory of the controlling shareholder nature,the effect of governing non-executive directors and the incentive effect of managers' stock options,followed by principal-agent theory,human capital property rights theory,theory of surplus-value claim and the theory of incentives and constraints.A theoretical analysis of the relationship between the nature of controlling shareholders,the relationship between non-executive directors' governance and the incentive effect of managers' stock options was conducted,and theoretical hypotheses were proposed.Through theoretical and empirical analysis,the following conclusions are drawn:(1)The effect of non-state-owned listed companies in implementing stock option incentives is better than that of state-controlled listed companies in implementing stock option incentives;(2)Among non-state-owned listed companies,the larger the controlling shareholder's shareholding ratio,the better the effect of stock option incentives.Among the state-controlled listed companies,the larger the controlling shareholder's shareholding ratio,the worse the effect of stock option incentives;(3)The state-controlled listed companies with affiliated non-executive directors are more effective than state-controlled listed companies without affiliated non-executive directors.The higher the proportion of affiliated non-executive directors in the board of directors,the more effective the stock option is.The better(4)The effectiveness of stock option incentives for non-state holding listed companies with associated non-executive directors is not significantly different from that of non-state holding listed companies with non-executive directors.This article is divided into six parts.The first part is introduction,introducing the research background,research ideas and research methods.The second part is the literature review at home and abroad,including the study of the incentives,effects and influencing factors of the implementation of stock options incentives.Secondly,it summarizes the results of the research on the governance of associated non-executive directors and reviews the literature.The third part is the theoretical summary of the nature of controlling shareholders,the effect of non-executive directors and stock options,explains the concept and types of equity incentives,analyzes the main factors affecting the incentive effect of stock options,and summarizes the related non-executive directors in corporate governance.The role of the medium and the description of the principal-agent theory,the human capital property right theory,the theory of surplus-value claim and the incentive-constraint theory.The fourth part is the theoretical analysis of the nature of controlling shareholders and the incentive effect of non-executive directors and stock options.It theoretically explains the influence of controlling shareholders and the influence of non-executive directors on the incentive effect of managers' stock options.and puts forward four hypotheses of this paper.The fifth part is the empirical test of the nature of controlling shareholders and the incentive effects of non-executive directors and stock options.The sample of A-share listed companies that implemented managers' stock option incentive plans from 2006 to 2015 is used as a sample,using variable descriptive statistics and multivariate linearity.Regression analysis and other methods test the hypotheses proposed in this paper.The sixth part is the research conclusions and policy suggestions,summarizes the conclusions of this paper,puts forward related policy recommendations,and points out the lack of research.The main contributions of this paper are as follows:(1)This paper discusses the impact of internal corporate governance on the incentive effect of managers' stock options from the aspects of the nature of controlling shareholders and the governance of non-executive directors.and enriches the literature on the factors affecting the stock option incentive effect.At the same time,it has expanded the theory of internal corporate governance in China.(2)This paper studies the differences in the incentive effects of stock options between state-owned and non-state-owned listed companies,and examines the role of the controlling shareholder nature,which is conducive to understanding the agency problems of two different types of ownership companies.It is a mixture of state-owned enterprises in China.The ownership reform provides reference.