Research On Determinants Of Intensity Of Executive Stock Option Of Chinese Listed Companies

With the separation between the ownership and the management, the owners alleviate the agency conflict between the shareholders and the managements by the incentive and constraint mechanism. As an important ingredient of the management incentive compensation plan, equity incentives have been developing for a long time in the foreign listed companies. With respect to the specific institutional backgrounds and the policies of china, the equity incentive plans had stayed in the exploratory stage for a long time. Until the non-tradable shares reform of the Chinese listed companies were finished, along with the additional amendments to the relevant laws, Chinese listed companies have entered the formalization phase of equity incentives.In this circumstance, take the 52 listed companies that disclosed their equity incentives drafts between year 2006 and year 2007 as the research sample, this dissertation deeply analyzes the managers stock options' incentive effect from a reverse aspect that we analyzes influential factors on the equity incentive plans. That is to say, managers stock options is to reduce the shareholder equity, if the implementation of equity incentive really reduce the agency cost, so the higher agency cost need more equity incentive to implement which can lower the agency cost. This article mainly from the agency theory Angle, quite comprehensively considering the equity incentive strength that may influence the various incentive factors, including managers share ratio, the proportion of the independent directors, the largest shareholder, corporate capital structure, financial leverage, growth opportunities, the company size factor; we also consider the company's liquidity constraints as the incentive factors on the stock ownership incentive effect on the strength.It is found that, among the influential factors on the equity incentive plans, managers share ratio, the proportion of the independent directors and free cash flow parameters are positively related with the intensity of stock ownership incentive, the largest shareholder parameters, the company growth opportunities parameters, financial leverage parameters and company size parameters and the stock ownership incentive degree are inversely related. Managers share ratio, the largest shareholder parameters, company size and free cash flow parameters are strongly related with intensity of stock ownership incentive. Five of the seven research assumptions get empirical results support.