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Research on Relationship between Stock Option Incentive Income and Value Creation of A Shares Listed Companies

Author: ChaiManZuo
Tutor: ChenChunHua
School: South China University of Technology
Course: Business management
Keywords: Stock Option Incentive Incentive Income Value Creation Interest Coordination Fractal Market
CLC: F275
Type: PhD thesis
Year: 2013
Downloads: 127
Quote: 0
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Abstract


Stock incentive especially stock option incentive is recognized to be the United Statessuch as booster of economic growth. In fact, equity incentive is a double-edged sword, if theequity incentive contract design undeserved, will not be get incentive effect, and even becomethe tool that executives erosion interests of the company, bring huge losses to shareholders; Ifthe equity incentive contract design is proper, can give enterprise, executives and shareholdersto create huge wealth, achieve the effect of the incentive compatibility. Based on the view ofinternational academic research and business practice, there have no consistent conclusionthat the effect of the implementation of equity incentive, in this case, we are afraid we can’tdirectly to guide the practice of China’s company, even if use the equity incentive case of theUnited States and other developed countries. The academic circles have different views aboutthe equity incentive in the listed companies can play a role in our country. In the practice ofresearch has just started, implement equity incentive plan is hard to be a simple copy. But as aresult of equity incentive in our country belongs to the innovation, must have some drawbacks,and is likely to lead to arguments.In this paper, A shares usher in full circulation times and listing Corporation in Chinawill actively promote the realistic background of the implementation of equity incentive, it isnecessary to make clear: listing Corporation incentive income and the value of the stockoption incentive exactly what is the relationship between the creation? On the A shares oflisting Corporation have implemented stock option incentive effect how? To have announcedbut terminating the listing Corporation (the majority of claims and the termination of themarket volatility and inspection unfavorably about) is it right? Not really a stock optionincentive conditions? Can reduce the number of implementation of incentive and terminate?With these questions in this paper summed up the causes, and then summed up the impact ofChina’s A shares of listing Corporation executive stock option incentive conditions and findout the balance of interests between shareholders and executives of the contract design, toguide the future design and improvement of incentive contract, to improve the incentive effect,create more value for shareholders, better protection of the interests of shareholders to. Basedon this, this paper on China’s A shares of listing Corporation executive stock option incentiveincome and value creation of research is very important, is of great theoretical and practicalsignificance.In this paper, the management equity incentive during the period from October1,2006to September30,2012after the two measures issued by the Shanghai and Shenzhen A shares,the implementation of the257listing Corporation equity incentive plan (include a companymany times the implementation of equity incentive situation, the implementation of stockoption164) as the research sample, makes an empirical research on the relationship betweenincome and value creation of incentive stock option. By using the software Eviews6.0,MATLAB7.0,SPSS17.0statistical software and EXCEL2010data processing software dataanalysis, descriptive statistical analysis of samples, after theoretical analysis on therelationship between stock option incentive income and value creation, an empirical study onthe influence of the value creation ability and the listing Corporation to implement theincentive effect of stock option incentive factors and income, summed up the balance pointbetween listing Corporation stock option incentive income and value creation, provide strongtheoretical support for the establishment and improvement of China’s A shares of listingCorporation stock option incentive contract design, the stock option incentive mechanism andput forward the corresponding policy suggestion system validity and capital marketconsiderations.This paper mainly studies the content and main viewpoints are as follows:Firstly, the relationship between income and value creation incentive pay attention. Intheory, the evolution of the split share structure reform in China and under the background offull circulation of A shares of listing Corporation to implement the stock option incentive planand implementation status, proposes the research framework option in China A shares oflisting Corporation stock incentive: including the ability to create shareholder value andinfluence factors, the stock option incentive factors affecting the implementation effect andincentive income and the relationship between creation and shareholder value; forming abeneficial supplement to has incentive stock option under the background of full circulation.Secondly, looking for lead to incentive income and value creation of the uncoordinatedfactors. The first theoretically analyzes the relationship between income and value, incentivestock options to create the results show that: the option incentive income is part of the newvalue creation, value more new creation, to give executives incentive income should be more,only when the balance between positive proportion between them, in order to effectivelymotivate executives to work hard to create more value for shareholders. Second in theempirical research by constructing Binary Logistic regression model to Chinese listingCorporation equity incentive value creation ability to conduct empirical analysis, resultsshowed that: the company growth ability, ownership and control of ownership is to createshareholder value significantly affects the listing Corporation factor ability, but its significance as the stock market changes, i.e. natural person holding the creation abilitystronger than the state-owned and non state-owned listing Corporation shareholder value;ability to grow better, the higher the proportion of shareholding of the company’s valuecreation ability.Thirdly, taking the issue of stock option incentive intensity to further discusses. Putforward that a stock option incentive intensity coefficient and the effects coefficient of stockoption incentive has a significant impact in the listed company stock option incentive contract,that is to say competitive decision effect to the long-term performance of the stock optionincentive plays the decision role, and through stock option incentive intensity of managers inthe same industry market competition pressure to characterization, we found that incentiveintensity impact on corporate profitability are more significant, and incentive effect is betterin the bull market phase.Finally, Taking the market considerations into the incentive contract design and operatingprocedures. Using multivariate regression model from profitability and growth point of viewto find out the factor that affect the stock option incentive income, empirical findings: the keyfactor is different under the different market, but in general, The controller ownership,incentive intensity, the time of motivate are the key factors that affect the stock optionincentive income. That is to say that endogenous of stock option incentive decide long-termperformance. This further indicates that: China’s listed company’s stock option incentive isacting a double role. On the one hand, the principal role of the constraints of agents to reduceagency costs; On the other hand, expressed as a substance given to senior executivescompensation in the industry by providing a competitive executive incentive income, andpromote entrepreneurial spirit of innovation. Based on this, from a normative incentive stockoptions and capital market efficiency aspect, We put forward a operability policyrecommendations how China’s listed companies to implement stock option incentive.

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CLC: > Economic > Economic planning and management > Enterprise economy > Corporate Financial Management
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