Research On The Effect Upon The Stock Option Plan Of The Listed Companies To The Company Performance

The stock option is a kind of incentive system appeared in the middle of 20th century. It matches the power of surplus control with the power of surpluses share mutually by executive's participating the surplus share. It resolves effectively the problem of Client-Agent and makes executives incline to maximizing shareholder's benefits. It's called golden handcuffs. That is why that stock option enjoys panegyric when it appeared. Many companies adopt it in succession in a lot of counties in around the world. In China, stock option was also imported in 1990's. Meanwhile, there have been a lot of articles on how to design, improve and extend the implement of stock options in literature. However, due to the specific economic environment in China, besides the inadequate laws and related accounting treatment, the early stock option plan is limited. It can't be called the stock option in its true sense. After 2006, China Accounting Standard, Company Law and other related laws have been improved. The stock option plan is coming into spring. But in 2007, some companies showed a deficit because of the stock option plan. People began to question whether the stock option plan is just to bring golden watch to the executives.Based on the question above, we discuss the relation between the stock option plan of the listed companies and the company performance by empirical research, in order to explore whether the stock option is to bring the golden handcuffs or golden watch to the executives. After reviewing the correlative literature, analyzing the basic theory related to the stock option, especially introducing the current situation of the stock option in China, we pick up some listed companies in Shanghai and Shenzhen stock market which have fulfilled share structure reform and adopted the stock option plan as basic sample. By using the method of factor analysis, we get the composite performance index and have multiple linear regression analysis in which the stock option proportion is the independent variable. We also use interval analysis to classify the impact of the different stock option proportion on the company performance, in order to get the cut-off point.Based on the demonstrating study, we find that there is an obvious positive correlation and interval effect between the stock option proportion and the company performance. This paper gives advice on the problem of the stock option existed in China, including regulating the capital market, regulating the executive market, consummating corporate governance structure, etc.This paper is composed of five chapters and logically can be divided into three parts. In the first part, we research the introduction, the basic theory of the stock option plan and its current situation in China. In the second part, we research the relation between the stock option plan of the listed companies and the company performance by empirical research. We draw conclusions in the third (last) part, we also give some suggestion.