Research On The Impact Of Stock Option Incentives On Executive Risk-taking

As the intensity of China’s reform and opening up has become stronger and the capital market has become more complete,the stock option incentive mechanism has been introduced into China since the 1990 s.After more than 20 years of development,more and more companies have adopted stock options to motivate management and retain talents,in order to reduce the cost of principal agent and better solve the problem of inconsistent goals between owners and managers.However,as stock options are more widely used and promoted,there has been a phenomenon that companies that have begun to implement stock option incentive schemes give up the implementation after several years due to various factors,and there are a few companies that withdraw quickly after the scheme is announced due to market changes.The occurrence of these events has caused people to doubt and reflect the stock option mechanism itself.Most of the existing literature studies the effect of stock option incentives on company performance,while the effect of stock option incentives on executive risk taking is relatively rare.This paper selects the relevant data of 498 listed companies in the Shanghai and Shenzhen stock option programs from 2010 to 2019 that under implementation or have been completed from the Wind and CSMAR databases to study the impact of stock option incentives on executive risk-taking.First,on the basis of classic agency theory and behavioral agency theory,according to the incentive conditions and incentive validity period,the stock options are divided into two types: "incentive" and "welfare",respectively observing and studying the relationship between incentive degree and executive risk-taking level.In addition,this article introduces the regulatory variable of market competition to explore its impact on the relationship between stock options and risk-taking.The research results show that:(1)There is an inverted U-shaped relationship between the incentive degree of "incentive" stock options and the executive risk-taking level,and a linear negative correlation between the incentive degree of "welfare" stock options and the executive risk-taking level;(2)The more intense the market competition,the more backward the inverted U-shaped relationship between the "incentive" stock options and the executive risk-taking level,and the weaker the negative correlation between the "welfare" stock options and the executive risk-taking level.Finally,from the aspects of company internal governance,external market environment,relevant regulatory departments and the design of stock option incentive scheme itself,it puts forward corresponding countermeasures and suggestions on how to effectively improve the effectiveness of the stock option incentive plan...