THE IMPACT OF MANAGERIAL STOCK OPTION ON FIRM PERFORMANCE: EVIDENCE FROM CHINA

This paper examined the effects of the managerial stock options of the listed Chinese firms on the firm performance. Based on our knowledge, it is the first empirical evidence describing the market’s reaction of stock option implementation in China. The results revealed that the firm performance was influenced by working machinery and external factors. One of the factors was a stock option that has a significant negative impact on firm performance; however, the level of impact decreases year by year in a long-term. In addition, the study showed that duality CEO and board size also have a significant negative impact on the performance of the firms but the independent boards and state-ownership positively increase firm performance. Moreover, there was a little impact of the international financial crisis on firm performance in Chinese stock markets during 2007-2009 was uncovered.