| As of December 31,2005,in order to promote the reform of China's capital market and promote the establishment of a sound incentive and restraint mechanism for enterprises,the Securities Regulatory Commission of the State Council promulgated the Measures for the Administration of Equity Incentives for Listed Companies(Trial).Since then,more and more listed companies have used stock options to motivate employees.Stock option has become an important tool to motivate employees and an important part of compensation.Chief Executive Officer(called as CEO),as an employee representative,is an important executive that influences the company's decision-making and development.We use the CEOs as research objects to study what factors affect the intensity of the option incentive of the company when implementing the option incentive.Combined with previous research,we found that gambling characteristics may be one of the factors that affect the strength of option incentives.Gambling refers to a kind of psychological or behavior of people “gamble for big payoff with a small invest”.According to the theory of cumulative prospects,people will invest in positive skewed stocks because of the psychology of “gamble for big payoff with a small invest”.In this type of investment,gambling investors overestimate the probability of obtaining high returns from those stocks,causing stock prices to be overvalued,which in the short term will drive up stock prices.Thus companies with strong stock gambling characteristics may award more CEO stock options to attract and retain CEOs.Our research helps to understand the logic of the listed company's option incentives and the psychology of both the company and the manager.We selected 144 Shanghai or Shenzhen A-share listed companies that have granted CEO options for the first time in the decade from 2007 to 2016 as research objects.We use the expected idiosyncratic skewness as an indicator to measure the gambling characteristics of stocks and obtain corresponding companies not granting option to CEO through sample matching,and finally get the sample of this study.We first analyze the differences between the two types of companies in various variables,and then use the multi-dimensional Tobit model to further explore the issue.The empirical analysis shows that there is a negative correlation between gambling characteristics and the CEO's option incentive intensity,and when the sample matching ratio is 1:3,the regression coefficient is statistically significant at the 1% level.In other words,for companies with high gambling characteristics,the CEO's option incentive intensity is lower. |
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