Stock Incentives, Exercise Price Manipulation and Payout Policy of Listed Companies

Take the public companies that issue managerial stock option incentive plans during 2006 similar to 2010 as samples, and use T test and logistics regression, to study how the managers use stock option to manipulate the benefits of equity incentives. The results show that stock dividend policy is the main way for the managers to manipulate their stock option benefits, while cash dividend declines the manipulation but the effect is not significant. For companies that use stock option incentives, the managers purposefully use stock dividend to reduce the exercise price, and manipulate the equity incentive benefits through 'pricing hallucination'.