Study On The Equity Incentive Wealth Effect Of Chinese Listed Companies Based On The Allocation Of Control Rights

Since2006, with the laws and regulations about equity incentive being put forward and equity incentive system being continuous improved, a growing number of listed companies have declared and implemented an equity incentive plan, and the equity incentive has become an important means for a modern company to solve principal-agent problem. However, while the implementation effects of equity incentives are different in reality, academic scholars have a different view of the equity incentive effect and causes. Thus, the research on the equity incentive issue has become a hot topic. This thesis selects as a research sample the listed companies which announced equity incentive program in2006-2011, reveals the status of equity incentive and control rights from the perspective of the company control rights configuration, and systematically studies the impact of control rights configuration on equity incentive and equity incentive wealth effect.Firstly, based on the literature review, this thesis elaborates and defines equity incentive preferences, equity incentive costs, equity incentives methods, equity incentive intensity and other equity incentive concepts, ultimate controlling nature, the largest shareholder control, board structure and executives shareholding and other control rights configuration concepts; it defines wealth effect from two dimensions of short and long term, absolute and relative, and explains its measuring index. Meanwhile it elaborates and analysis principal-agent theory, human capital theory, incomplete contract theory and other equity incentive theories, Marx’s theory of property rights, modern enterprise theory, internal control theory and other control rights theories, as well as efficient market theory, signal transduction theory and other wealth effect theories.Secondly, this thesis reveals and analyses equity incentive situation from five aspects of the fundamentals, incentive preferences, incentive costs, incentive methods and incentive intensity. In the meantime, the thesis also reveals and analyses control rights configuration status of listed companies which announced equity incentive programs from four aspects of the ultimate controlling nature, the largest shareholder control, board structure, and executive shareholding.Thirdly, this thesis inspects the impact of control rights configuration on the equity incentive. It builds the Logit model and multiple linear regression model to test the respective impact from such control rights configuration variables as ultimate controller nature, the largest shareholder control, board structure and executive ownership on the equity incentive preferences, equity incentive methods, equity incentive costs and equity incentive intensity.Fourthly, this thesis measures the wealth effect of short-term equity incentive. It uses event study method to test market reaction of equity incentive announcement event, and the CAR to measure short-term absolute wealth effect of equity incentive. It builds SFA efficiency model and takes the cost and degree of equity incentives and CAR respectively as input index and output index. It implants such variables as the ultimate controlling nature, the largest shareholder control, board structure and executive shareholding into the model to measure the short-term relative wealth effect of equity incentive.Fifthly, this thesis measures the long-term wealth effect of equity incentive. It builds a multiple linear regression model, and takes three steps to systematically investigate long-term absolute wealth effect of equity incentive in such three cases as the independent action of equity incentives, joint action of equity incentive and control rights, and interaction of equity incentive and control rights. It builds SFA efficiency model and takes the cost and degree of equity incentives and△Tobin’Q of eliminating the industry-specific respectively as input index and output index. It implants such variables as the ultimate controlling nature, the largest shareholder control, board structure and executive shareholding into the model to measure the long-term relative wealth effect of equity incentive.Finally, this thesis suggests to enhance the company’s equity incentive preference, set a reasonable equity incentive program, optimize control configuration structure to increase the wealth effect of equity incentive.