Incentive Effect of Executive Stock Option: Empirical Evidence from Listed Companies of Japan

With the occurrence of accounting scandals in Enron Corp, Incentive Effect of Executive Stock Option(ESO) is being questioned more and more. The task of the greatest urgency at present is to ascertain and find out whether ESO provides the administrators a stimulus to improve the corporate performance. This essay carries out a study with the samples from Japanese listed companies and the results show: the company´s share price and performance with the introduction of ESO are significantly higher than those without; the incentive effect of the new and high-tech industries with the introduction of ESO is significantly better than those industries with traditional technology.