Researse On The Impact Of Equity-based Incentive On The Profitability Of Chinese Listed Company

The objective of equity-based incentive is to solve the problem of principal-agent arising from the separation of ownership and control, by way of granting a certain part of the equity to operators, allowing operators to have a dual role of principal and agent, promoting the interests of operators and shareholders to be tied up, stimulating the operators to work hard to achieve win-win situation.Equity-based incentive which is a long-term incentive is suitable for long-term development of the modern enterprise, Early in the 1990s, the Chinese began the exploration of the equity-based incentive, because of the lag of policy, the early establishment of equity-based incentive system walked a circuitous road and seemed ineffective. In 2005, China began to implement split share structure reform and in 2006 introduced two equity-based incentive related documents, which is the legal basis of the implementation of equity-based incentive, the environment of equity-based incentive has been significantly improved. In this article, we take the opportunity of the new environment to explore the influence of the implementation of equity-based incentive on the profitability of the listed companies.First of all, this article analyzes the theoretical basis of equity-based incentive, reviews the effect of the implementation of domestic and foreign equity-based incentive, summarizes some problems in previous studies to find breakthroughs in this article.Second, this article analyzes the impact of equity-based incentive on the profitability of listed companies and then submits the corresponding four assumptions, in order to verify these four assumptions, we selected 43 listed companies as samples which implement equity-based incentive in 2006, excluding a number of unsatisfactory samples, the last remaining 39 listed companies, we extract indicators of the profitability from these companies, and select the model of the evaluation of profitability. Again, we start the empirical test, we get the profitability scores of the samples before and after the implementation of equity-based incentive by factor analysis, then we contrast the two scores and we take the linear regression analysis between the equity ratio, size of company, growth, the level of assets and liabilities and the effect of equity-based incentive. We found that the profitability of the listed companies has increased after the implementation of equity-based incentive, but the rate of increase should be improved; the rate of increase of the profitability of private listed companies is greater than that of state-owned listed companies; the implementation of the incentive effect of restricted stock is better than that of other equity-based incentive model. In the regression analysis we found that the level of equity-based incentive is related to the effect of equity-based incentive in a larger range, we also found that there is no correlation between control variables as firm size, the level of assets and liabilities and the effect of equity-based incentive while there is a positive correlation between the growth and the profitability of listed companies after the implementation of equity-based incentive.Finally, this article carries a certain conclusion, and on this basis, puts forward some policy recommendations.