A Case Study Of Hytera’s Stock Option Motivation And Its Performance

As modern enterprise system and corporate governance improves,equity incentive unifies the different interest demands between corporation owners and managers,and in gradually becomes an important tool to solve principle-agent problems.With the publishing of domestic policies about equity incentive and more emphasized on persons of ability,equity incentive is prospering in China.The paper adopts case analysis method mainly,and selects Hytera as the research object.On the basis of sorting,analyzing relevant papers,theory bases,developing situation;introducing background of Hytera,stock option processes,the author consider that the motivations are following the trend of equity incentive as a talent and technology intensive company,reducing agency cost,attracting and stabilizing outstanding people,support strategies,optimizing equity structure,large scale,high operating uncertainty,growth and free cash flow in an endogenetic perspective,and more suitable for stock option on selecting equity incentive patterns.In order to measure the performance of Hytera stock option,the paper calculates,analyses short,long term market performance using event study method firstly,and concludes that abnormal return and BHAR are improved dramatically,which means sustained positive response from market.Then,the paper analyses the financial performance by financial indicators analysis method and EVA evaluation method and the conclusions are as follows: The grows,profitability deducting industrial value,long term solvency are improved dramatically by stock option;Operating capacity is improved in a short term;Short term solvency is not improved;EVA has an exponential growth.Then,the paper chooses Yalian Development as a comparative sample,which does not implement equity incentive,and concludes that it performs worse at profitability,grows,solvency,operating capacity and EVA,which means stock option can improve financial performance.Finally,the author analyses mechanism that stock option affect performance and concludes that stock option reduces agency cost in an exogenic perspective,industry opportunity,high growth,endogenetic demand increased by existing performance,effective monitor and some other factors influence stock option efficiency comprehensively in an endogenetic perspective.Finally,the paper points out several shortcomings including that motivation system is not scientific and reasonable enough,position analyses are not effective enough.In addition,the author suggests technology and talent intensive enterprises to form a sense of strategy guidance in terms of equity incentive,and attach more importance on endogenetic equity incentive with the successful experience of Hytera.