Research On Improving Countermeasures Of Equity Incentive In China's Listed Companies

Along with the arising and development of modern enterprise system, the enterprise's commission-agent problem and management's incentive-restraint problem gradually emerged. Arising in1950's, equity incentive system has been practiced in companies of western developed countries for many years and achieved great success. It is regarded as the most effective solution to resolve commission-agent problem and enhance corporate performance. From 1990's, equity incentive system also began to be put into practice on a trial basis in China.China's capital market has got into equity division reform since 2005. "The Management Approach about Equity Incentive of Listed Companies" which was issued by the SFC and came into effect in 2006 allowed the listed companies which had completed equity division reform to put the equity incentive into practice. After that, the rules and regulations on the equity incentive system had gradually been improved. The equity incentive system began to develop thriving in China. With this background, analyzing theoretical basis of equity incentive, studying on the implementation effect of equity incentive of China's listed companies and making some policy recommendations has great practical significance to promote the development of equity incentive system in China's listed companies.In the beginning of the paper, theoretical and empirical researches on equity incentive of domestic and foreign scholars are summarized. On the basis of this, incentive theory, commission-agent theory, corporate governance theory and human capital theory are analyzed as the basis theory of equity incentive. Then, this paper details the development and implementation of equity incentive system in America, Britain, Japan and China. Afterwards, this paper does a sample of empirical research on the relationship between the equity incentive and corporate performance in China's listed companies. Research results have shown that the equity incentive has little effect on corporate performance. Finally, in light of the actual conditions of China's companies, in view of implementation procedures, corporate governance as well as external environment of the three options, the paper analyzes the reasons of little effect and puts forward countermeasures to improve equity incentive in our listed companies.