The Study Of Stock Option Incentives' Effects On Corporate Risk-taking Level

The separation of ownership and management rights in modern enterprises results in agency problems.Management may be reluctant to invest in high-risk positive net present value projects,because of their personal interests such as job consumption,salary and career.Therefore,shareholders need to take appropriate incentive measures to reduce the deviation of risk attitudes between shareholders and management,so as to make the risk-taking decisions of enterprises better coordinate with the interests of shareholders.Since 1980,many companies in the world have begun to use stock options as an important part of management compensation in order to realize the purpose of sharing benefits and risks between shareholders and management.At present,more and more companies adopt option incentive as their main incentive way to motivate executives and core technicians.However,previous studies have shown that option incentives do not motivate managers to take corporate risks positively.At the same time,China's GEM is also in the growth stage.Its business model is more innovative than traditional enterprises.It is generally smaller in scale,less stable in operation.It has greater uncertainty and higher risks.For the GEM market,its business management is more complex.It is necessary to conduct theoretical and empirical research on the impact of option incentives on the risk-taking level of companies on the GEM.Based on the relevant theories of stock option incentive and risk-taking,this paper selects non-financial companies that announce stock option incentive plans in GEM from 2010 to 2017 as samples to empirically study the impact of stock option incentive on risk-taking level of companies,including total risk,systematic risk and specific risk after subdivision,that is,to study the influence of Delta and Vega on enterprise's total risk-taking level,systemic risk-taking level and specific risk-taking level.The conclusion of this paper is as follows:the total risk change,systemic risk change and specific risk change of the companies with stock option incentive are significantly greater than those without stock option incentive.Companies with stronger growth,higher agency costs and more difficult supervision tend to adopt stronger stock option incentives;the impact of stock option incentives on corporate risk-taking level comes from the negative incentive effect of stock option price sensitivity Delta,as well as the positive impact of stock option price volatility sensitivity Vega.The effect of stock option incentive on the level of corporate risk-taking depends on its comprehensive effect of providing risk-taking and risk aversion,but it has a clear positive effect on the level of corporate specific risk-taking.