The Impact of Stock Option on Company Organization Capital

——Evidence from Listed Firms in China CUI Hui-jie1，CHEN Chong2 and ZHANG Ya-nan3

（1.Beijing Foreign Studies University，Beijing100089，China；2.City University of Hong Kong，Hong Kong SAR999077，China；

3.Central University of Finance and Economics，Beijing100081，China）

Abstract：Existing theories concerning stock option believe that：on the one hand，stock option will be helpful in relieving the principal-agent conflict between top managers and shareholders，which will in turn help the enterprises to realize higher value (the incentive hypothesis)；on the other hand，stock option is identified as a kind of compensation for top managers，which will be not beneficial for us to solve the principal-agent problem (the welfare hypothesis). Based on the sample of Chinese listed firms from 2005 to 2017，the authors carry out the empirical research on the impact of stock option on company organization capital， and the mechanism of that. It is found that：stock option plays a significant positive role in enhancing firms’organization capital (supporting the incentive hypothesis)；the role of stock option will be more significant with lower percentage of corporate independent directors， smaller scale of board of supervisors， and lower percentage of institutional stockholders. While formulating the stock option strategy，besides the short-term performance improvement，the enterprises should also combine the stock option with organization capital accumulation needed by the long- term corporate development and comprehensively consider the perfect level of corporate internal and external governance mechanism to achieve the result of utility maximization.

Key words：stock option；organization capital；internal governance；external governance