Study On The Effectiveness Of Companies' Equity Incentive Mechanism Of Listed Company In China

Equity Incentive Mechanism originated in the United States in 1950'and it was introduced into Europe in 1970', Asian countries began to develop it in 1990'. Since 2006, Chinese listed companies have done lots of practices on the companies'equity incentive. Compared to the rapid development of securities market, listed companies had a slow development in equity incentive mechanism in China. As the legal system, institutional background and the governance structure of listed companies in China is different from the Western developed countries, whether the equity incentive mechanism in our country could be effective is the focus of this paper.First of all, this paper introduced the development experience of foreign equity incentive mechanism, the development and status of equity incentive mechanism of listed companies in China. And then, based on the standard of measuring effectiveness of equity incentive mechanism, this paper selected 38 listed companies which have implemented the equity incentive mechanism during 2006 and 2008 as the research sample and established two empirical research models to study its effectiveness during 2007 and 2009. This paper mainly drew the following conclusions:1. The equity incentives mechanism and business performance of listed companies did not exist a significant positive correlation. After llisting equity incentive mechanism, the companies'business performance or return on equity ROE was not significantly improved, individual companies'ROE even fell instead of rising.2. The business performance of listed companies and the company's stock prices did not exist a significant positive correlation. But overall,1 year after Chinese listed companies released equity incentive mechanism, the stock prices of these compaines rose in varying degrees.3. Because of the constraints and shortcomings of capital market, professional manager market, product and services market, corporate governance and performance appraisal, the effectiveness of equity incentive mechanism of listed companies in China was not ideal, so its effective level still need to be improved. Finally, this paper proposed suggestions to improve the performance of effectiveness of listed companies'equity incentive mechanism.