A Study Of The Effect Of Stock Options Of GEM Listed Companies

The separation of ownership and management right under the modern corporate system has made it possible that the managers could harm the interests of the shareholders for the sake of their own,which is also called the cost of the agency.Stock options,as an incentive tool,are designed to achieve a win-win situation by granting certain amount of stock options to the managers who create profits for the company while making extra earnings,and to coordinate the management's interests with the interests of corporate.However,the stock options carried out have not produce the expected results,against the background that the stock options program has been increasing year by year,especially among the companies listed on GEM.Therefore,it is of great practical significance that the thesis chooses GEM listed companies as the study object to analysis the effects and influencing factors of the stock options.This thesis firstly explores the existing situation,implementation process,effects and possible influential factors of stock options at both home and abroad by looking into the current document databases,and then further studies the incentive effect and influential factors of stock options of GEM listed companies in China.Moreover,this thesis selects 121 GEM listed companies that carries out stock options and taking ROE and EPS as the performance indicators to reflect the effect of GEM stock options through both horizontal and vertical comparisons.Based thereon,the thesis researches into the possible influential factors of stock options of GEM listed factor,and,in particular,conduct a case study of the stock option of Huace Film&TV,through linking work at selected spots with that in entire areas to make the analysis more convincing.Through the vertical comparison of the performance of the sample companies and horizontal comparison within the industries,as well as comparing with the companies that do not implement stock options.The thesis comes to the conclusion that the effects of the stock options of GEM listed companies fails to meet the expectation and are not effective to improve the performance of the companies.The case study employs the same horizontal and vertical analysis method to prove that the stock options has not significantly enhance the performance of the GEM listed company.To summarize the analysis,the corporate governance,design of the stock option scheme and capital market environment of GEM companies will all influence the effects of stock options.As the last step,based on the conclusions and the impact of stock options,the thesis puts forward improvement suggestion include:(i)to improve the information disclosure,to crack down on insider trading and to standardize reducing holdings of stocks to establish a good order in the capital market;(ii)to appropriately increase the proportion of options granted by improving the exercise conditions,adding more assessment indicators and extending the validity period to improve the options design;(iii)to improve the company's internal governance structure in terms of ownership structure and internal supervision;and(iv)in addition,to provide a reference for the implementation of GEM stock options through improving the policies related stock options,regulating the implementation of stock options rules,blocking the system loopholes and providing a reference for the implementation of stock options of GEM listed companies.