Equity Incentive And Corporate Performance Of Listed Companies In China After The Split Share Structure Reform Study

The stock option incentive is widely used in the practice of corporate governance in western developed countries and has obtained great success.The listed companies in China also had begun to try executive stock option and making manager an inside shareholder in order to mitigate principal-agent problems from 1990s, but such a new incentive mechanism did not achieved the anticipated effect until the reform of non-tradable shares in 2005. Therefore, the effectiveness of the stock option incentive in corporate governance is disputed in the academic domain and the industrial world,and the stock option incentive has not obtained the large-scale promoted application in domestic, even once stopped.Foreign economists discuss the incentive mechanism of stock option incentive from the perspective of enterprise contract theory or from principal-agent theory, but they do not pay enough attention to the restriction of stock option incentive. On the other hand, many domestic economists discussed the link between stock option incentive and corporation value before the reform of non-tradable shares,but they did not give intensive research about how the non-tradable shares structure of listed companies affect the stock option incentive. Therefore,this dissertation will focus on the restriction of stock option incentive and the institutional influence by the reform of non-tradable shares.The author thinks that the manager also conforms to the supposition of "the economic man" and what he do is to maximize his utility.When the manager make the salary system,the investment decision,and so on,he will consider his own utility,and may not put the shareholders' benefit at the first.It is necessary to implement the stock option incentive with the effective incentive induction,then the manager will be able to pay attention to shareholders' long period value promotion on his own initiative,and might avoid moral risks.But shock option incentive will not work if some restrictions were existing.The biggest institutional obstacle is the dividing of shares(The same listed company has tradable shares and non-tradable shares at the same time),and the reform of non-tradable shares will bring real incentive power to the stock option incentive.After depicting the mechanism of stock option incentive,the author discusses the restriction of stock option incentive and the link between reform of non-tradable shares and stock option incentive.The author testifies this hypothesis by positive research on certain listed company in China and analyses some typical cases.Finally, the author probes into the practices of Chinese enterprises in utilizing stock incentives system to its managers and put forward some policy suggestions.