A Research On Executive Equity Incentive In Chinese Listed Company

The primary goal of executive equity incentive is to align the interests of management with those of shareholders and to incentivize management to manximize shareholder wealth and social value. The lack of long term incentive scheme for management of Chinese listed companies highlights the need for equity incentive.This paper focuses on the senior executive's stock-based incentive issue in our listed company,and carries on research to encourage effect of the senior executive's stock-based incentive of the listed company from two respects of the theory and real example. Proceeding from the actual situation, this paper describes the executives equity incentive implementation status of our country's listed companies, including the background and the characteristics, China's listed companies reached level executives of holding low, playing the incentive effect conclusions.The paper regard the Managerial ownership levels of incentives as an endogenous variable, to study the impact of high-level equity incentive factor. Based on the date of the 419 listed companies in Shenzhen stock exchange in 2006 period. The paper examines the endogenously of managerial ownership. The paper adopt four factor including the company's capital structure, characteristics, frame and the calling. Our conclusion is that contrary to the foreign economists' research, only the relationship between the equity incentive level and the growth opportunity and firm size is consistent with the optimal level proposed by foreign economists. However the relationship with other determinants-firm risk, free cash flow and managerial tenure-has nothing to do with the optimal level and is even just contrary to it. The analysis reason, we believed that, our country capital market, the company's govern structure as well as our country's telated policy and the law are not consummate. The paper used OLS and 2SLS testing the relationship between equity incentive and company performance, compared the results of both methods.Finally, proposed the countermeasures including the macro-environment and micro-environment.