The Study On The Correlation Between Equity Incentive And Financial Performance Of The Listed Companies

In the modern enterprise system, the interests of shareholders and professional managers are opposite in some times. The coming of equity incentive systems is to resolve the contradictions between the "commission - agent" relations as much as possible, so that the two sides have the same interest to facilitate the operation of enterprises. It is understood that the equity incentive mechanism brings more positive effect than negative results, so that in many countries, particularly the developed Western countries, the listed companies in the implementation of equity incentive plan is very common, even very popular. In the world's top 500 industrial enterprises, more than 90 percents are implementing the equity incentive plans. In some high-tech small and medium-sized enterprises, the equity incentive is a mainstream management practice.From the trial of ESO system in the company of Shenzhen Vanke Group in 1993, China's enterprises actively began to explore the equity incentive systems, but the lack of relevant laws and regulations made the path of the exploring does not go smoothly. Since 2005, China's capital market has got into equity division reform, and the laws and regulations on the equity incentive system have been promulgated one by one. They paved the way for the implementation of the equity incentive system, so it also developed thriving in China.Although the domestic and foreign scholars' theory and empirical research on equity incentive systems have been relatively fruitful, there is a greater difference of the practical application of the equity incentive systems in various countries and various periods and the results are vary. This article is based on China's special background to study whether the implementation of equity incentive system has brought higher performance to China's listed companies.This paper shares on the theory of incentives, and detailed descriped the development and implementation of the equity incentive system in China, then summed up the domestic and foreign scholars' research results on the relationship of equity incentive systems and corporate performance. Then this paper does a sample of empirical research on the relationship of the equity incentive and corporate performance in China and finally sums up and makes some recommendations.