A Research Of Relationship Between Executive Equity Incentive And Corporate Value

As the development of information technology and the emergence of social division of labor, the modern enterprise show an important. feature that the separation between ownership and management rights, which make a big problem that the shareholders and managers of the target inconsistencies. Shareholders want managers to improve enterprise value to achieve their own interests. Managers must be given certain incentives. Encouraging include many forms such as equity incentives, monetary incentives, bonuses and other incentives. An equity incentive has been recognized by many enterprises by far. Equity incentives mechanism is one of the important and long-term mechanisms in corporate governance.This mechanism lets the management personnel hold a certain amount of company stock, making interests between business managers and shareholders in line, effectively address the conflict between principal and agent, effectively reduce the agency costs, improve enterprise performance and ultimately improve business value. On the mature markets in Europe and the United States, equity incentives mechanism has been proven to be an effective incentive. While in China, the capital market being constructed, equity incentives mechanism in listed companies is not perfect, but it has been adopted by most enterprises as an important and long-term mechanism. To the effective implementation of equity incentive, the State introduced the corresponding laws and policies, providing conditions and the environment for the equity incentive development.With the constant improvement of governance after the split share structure of listed companies, more and more companies have begun to implement equity incentive system. The research of relationship between operators'equity incentive and corporate value, help understand the conditions and effects in the companies which implement the equity incentive mechanism; help improve equity incentives mechanism and the structure of corporate governance. This article proposes a theoretical model between executive equity incentive and enterprise value based on the domestic and foreign research. While, whether this model is applicable for our environment needs further empirical analysis to test. This article use A-share listed companies to study executive equity incentive after the implementation of equity division in China, selecting from 2007 to 2009 listed companies as samples, using EVIEWS6.0 software to analyze.First of all, the variables and the overall yearly statistical description let us understand the number properties of the different variables. Second, I will conduct the correlation and regression analysis, and also complete corresponding test based on the former works. The third, by analysis of empirical results, I will study the relationship between the executive equity incentives and the corporate value. This study shows a negative correlation between the executive equity incentives and the corporate value in listed companies. But it is not a striking testimony to say that the equity incentive mechanism dose not play a important role in listed companies performance. Finally, based on the analysis of problems of equity incentive implementation, I propose the corresponding policies and proposals.