A Research on the Alienation of the Reward Function of the Executive Stock Option

摘要

As an incentive, Executive Stock Option (ESO) plays an important role to perfect the corporate governance. It allows the executive's interest to be consistent with the proprietor's interest.But the executive reward function added ESO factor seems to alienate from the original objective: the stock price becomes the main determinant factor, while the stock price is independ of the company'sperfomance or the effort of executives.Therefore, it leads to the blind expansion and fianancial fraud,thus aggravating the bubble growth and stock prices fluctuations, and seducing cahoots of stock market participators. Then it weakens the incentive effect of ESO.