| With China's reform of non-tradable shares of listed companies and the revision of Company Law of the People's Republic of China, Securities law of the People's Republic of China, other relevant laws and regulations and the maturity of the securities market environment, the managerial equity incentives by the listed company get really began and rapid development. From 2005 to the end of June 2008, in Shanghai and Shenzhen stock market, there are 109 companies have announced the managerial equity incentives plan and even a lot of companies are getting ready for it. Because the international academic research and practical field have not unanimous conclusion on the practice of the utility of the equity incentives, there is no direct guidance for our practice in China. In addition, there are great differences about the whole economic development and the efficiency of capital market and even enterprise culture etc between China's companies and foreign companies. Before the managerial equity incentives plans start in a large scale of our listed companies, fully and deeply research is necessary to know how China's listed companies design the managerial equity incentives scheme to protect the interests of the shareholders better and what investors' attitude is on the managerial equity incentives problems and what kind of companies suit for using the managerial equity incentive mode, etc. Based on this, this paper chooses the effect of the managerial equity incentives of listed companies in China on the interests of shareholders as its topic.This research will be based upon the perspective of the shareholder and study the effect of the managerial equity incentives to the interests of shareholders, namely its influence on shareholders' rights and shareholder returns. I respectively adopt the listed companies which have announced the managerial equity incentive plans and those have actually implemented (awarded equity) plans as samples. In design stage of managerial equity incentive scheme I focus on researching plan itself and if the selectivity of the company is detrimental to the interests of shareholders. In plan announcement stage, I study the influence of events on the short-term earnings of shareholders through market reaction and the stock price fluctuation before announcement. In the implementation stage, I expect the effect of events to the long-term earnings of shareholders through observing the company's behavior change and make empirical test for the real shareholder interests and the interests of small shareholders before and after implementation. This paper try to find the possible problems of the managerial equity incentives in different stages and their influences on the interests of shareholders through comprehensive research in order to hedge risk and play a better incentive role when the listed companies launch a large-scale managerial equity incentives actions. With the logic chain, this paper was divided into eight parts:The first part is the introduction with the research background, significance, the related concepts and ideas, logical framework of this research and innovation. The keystone is to define the scope of this research. Firstly, I sort out the development process of the managerial equity incentives in China. I divided the whole course into four stages according to its development history, the source of stock right, laws and regulations and the features of capital market, then I determined this paper to study the fourth stage which was from 2005. Secondly, I determined the concept of the interests of shareholders according to the previous studies. The concept includes two levels without involving the content of laws and regulations. The first level is the shareholder's rights, by rearching the investor protection at the design stage, I studied the guarantee of the interests of shareholders of the managerial equity incentive scheme. The second level is shareholder returns, which include cumulative abnormal returns from the stock price fluctuation when plans are announced, the observation of company behavior change after the implementation of the managerial equity incentiveson and shareholder returns at the implementation period change behalf of short-term, long-term and middle returns of shareholders.The second part is the literature review. According to the definition of the interests of the shareholders, the literature review focused on the influencial of management equity incentives to shareholder returns and the influencial factors of managerial equity incentives. Through literature review, there is no explanation for the contradictory conclusion in overseas research and no direct draw experience from them because of the differences among the legal, economic development, the capital market and the culture in different countries. Then think about the present domestic studies. On the one hand, the conclusions are contradictory. Secondly, because of the different research stages applied, the equity incentives result in different incentive effects. Third, scholars basically make management shareholding as the replacement of the managerial equity incentives. So this paper can have its special significance which based on the implementation of the relevant laws and regulations in 2005. At the same time, the previous literatures studied the influencial of managerial equity incentives on the interests of the shareholders independently, but in fact, the structure of the board of directors, the ownership structure and controlling shareholder's properties can all influence the managerial equity incentive effects, which gathered together to study is another feature of this paper.The third part is the theoretical foundation. This paper takes the principal-agent theory, property rights (Corporation Control) theory and adaptability incentive theory as the study foundation. The principal-agent theory is the fundamental cause of the managerial equity incentives, but also put forward the problem of management rent-seeking. Based on this, the paper analyzed the corporate control, especially the ownership of company's actual control which may affect the scientificity and fairness of the managerial equity incentives. Finally, the paper analyzed further adaptability incentive theory, namely the research of the managerial equity incentives should focus on its system, and the design of the system must consider the harmony with other relevant systems, including corporate governance, corporate financial performance, enterprise management features and other adaptability factors.The fourth part is the selective preference research for managerial equity incentives of China's listed companies, of which mainly contents include the status of the managerial equity incentives, the characteristics of its plans and its selective preference. Through statistics and analysis on the specific characteristics of incentive plans, I found that vesting period (locking period) is too short, accounting indexes mainly are adopted as exercise (unlock) terms, the ratio meeting actual exercise terms is high and other problems. Through the selective preference research of the managerial equity incentives, I found that the listed companies carring on the managerial equity incentives have selective bias of the more conservative management in industry, better profitability, relatively more conservative financing activities which resulting in lower shareholder returns ability and lower stock price etc. Moreover, combining with the ratio meeting the actual exercise conditions, I can make the conclusion that it make for management instead of shareholders' right protection at the design plan stage.The fifth part is a study of the market reaction of the managerial equity incentives of China's listed companies.In this part, I have event study with all companies, which announced independent equity incentive plans, state-owned holding companies and other companies, companies announced plans in different years as samples, then through the investors' response find investors' expect of the future earnings. The results are as follows. The listed company get a positive market response after having announced the stock ownership incentive, but the cumulative abnormal returns of state-owned enterprises are negative in the [0,30] period which proved investors doubt on state-owned enterprises implementing the managerial equity incentives. The market reactions of incentive announcement in the different years show that although there are some unfavorable conditions of the managerial equity incentives to shareholders in some companies, the enthusiasm of investors weren't affected by them, which means investors don't realize the impossible risks with incentives to a certain extent. At the same time, this part also analyzed if there are price suppress actions at the plans notice 1 day and 30 days ago, and the results show that there are no price suppress in the listed company announced plans, just the CAR of state-owned enterprises are much lower in these periods compared to other companies. In addition, there may be some information leakage from studying the short-term CAR before and after the announcement which prove that China's capital market remains to be improved.The sixth part is the empirical study on the affecting of managerial equity incentives to company behavior. This part study the influence and driving factors of the investment behavior, financing behavior and income distribution behavior which impact on company performance the most and can be observed, then try to find some rules and expect whether shareholders' long-term interests realized. Through significant test on company behavior change before and after the implementation of equity incentive, I found that the dividend rate decreased significantly and the investment scale expanded significantly after the implementation of the managerial equity incentives. Then I further analyzed the driving factors and found that the relationship between the proportion of executive director and investment scale change is a negative correlation, namely when the seats of executive director in board increase, companies will reduce the excessive investment behavior effectively and further reduce agency cost.The seventh part is the empirical test on the incentive affecting shareholders' earnings in implement period. This part includes the design of shareholder earnings index, incentive effect test excluding the impact of industry and earnings management, test on changes of the controlling shareholders infringed the interests of small shareholders after incentive implementation. Firstly, I choose three indexes alternative shareholder earnings from different angles: rate of asset returns, earnings per share and PB. Secondly, through comparing the shareholder earnings after adjusting of industry of samples before and after the managerial equity incentives, I found that earnings per share and PB improved significantly and so did rate of asset returns. Moreover, because the accounting index can be affected by earnings management, this paper further test on the shareholder earnings change after eliminating earnings management and found incentive effect is not obvious. And I further have driving factors test on the difference of incentive effect and found that company executive directors proportion affects it as a more significant positive role, which means executive director exerts a significant positive effect after being awarded the incentive and then agency cost is reduced with degree increase of executive efforts. Finally, the paper discussed the situation and driving factors of controlling shareholder infringing the interests of small shareholders after the incentive and found that on the whole this kind of infringement after incentive was reduced which was driven by the executive director proportion through analyzing the driving factors.The eighth part is the conclusions and suggestions. According to the study result, this paper mainly gives three suggestions, the first is to give more guidance to the managerial equity incentives measures, the second is to reinforce mornitoring and management of information announcement and managerial equity incentives, and the third is to reinforce the research and establish of corporate governance machnism. The limitations is mainly at the short research period and fewer samples which affect the test of long-term incentive effect and driving factors, which may even affect the accuracy of the results which is also my further research task.Altogether, the innovations of this paper are mainly in the following aspects.(1) when study the interests of the shareholders, I study not only the shareholder's rights but also shareholder earnings by full process research defined from the different stages of incentive: in the incentive design phase I focused on shareholders' rights protection; in the process of implementing scheme I focused on the realization of shareholders' earnings which include the realizations of CAR represented shareholder short-term returns when plans announcement, medium-term returns after the implementation, and shareholders' long-term earning expectations after researching the company behavior change after the implementation.(2) Because the measure indexes of the shareholder returns in previous studies were different, this paper measures shareholder returns with both market indexes and accounting indexes based on the characteristics of the new capital market in China, and selects rate of asset returns, earnings per share and PB as indexes from the different angle of the realization of shareholder returns.(3) Through analyzing and comparing the characteristics of listed companies which have announced the managerial equity incentive plans, I studied the incentive selective preference of listed companies. The study concluded that companies had incentive with conservative management in industry, good profitability, but relatively conservative financing activities which resulting in the lower shareholder earnings ability, and I also found these companies have relatively lower stock price which benefit the management.(4) There are fewer researches on effect of company behavior by the managerial equity incentives currently, and they are basically just in one aspect. This paper holds that company behavior is the fundamentality which decided the realization of shareholders long-term interests, and then selects corporate investment behavior, the financing behavior and income distribution behavior as the research object, then expects the long-term incentive effect by studying company behavior changes before and after the managerial equity incentives.(5) During studying the changes of company behavior and shareholder return indexes before and after the managerial equity incentives, this paper further study driving factors of the changes on company level, and find that the relationships between executive directors proportion and investment scale change, the degree change of the controlling shareholder infringed small shareholders are negative correlation.
|
PDF Full Text Request