Research For The Choice Of Equity Incentive Targets In Domestic Listed Companies

The management circles are always exploring the problem about incentive, which is a universal and permanent task and that of starving for solving in Chinese enterprises. Especially for state-owned and listed companies, well management is the first thing for well operation, in which incentive mechanism is the key and it affects the subsistence and development of a company directly. The establishment and improvement of equity incentive mechanism for operators is an efficient way to deal the agency relationships between the stockholders and the operators and harmonize their benefit.As efficient long-term incentive mechanism to deal with the agency relation, equity incentive mechanism was widely executed in western companies in 80's last century, and proved greatly successful. In 90's last century, domestic scholars and enterprise circles began to explore this incentive mechanism and carried it out. Recently, there's no lack of works about how to design, improve and extend the equity incentive mechanism in theory circle. Presently, the companies which implement equity incentive mechanism have made some achievement, but it not seems to be ideal in the whole. There are many reasons account for the undesirable effect, and the author considers the choice of incentive targets as an important reason. Which targets are the best ones to be incent in the company to make the incentive mechanism works to its fullest extent? There comes the problem of the choice of equity incentive targets. According to theories related, this thesis is to express some opinions about it.According to the references consulted, most resent articles about equity incentive are concern about equity incentive system. Both in theory and practice, domestic companies pay little attention to the choice of equity incentive targets. This thesis intends to explore the way of strengthen company inner supervision in the terms of equity incentive targets. The purpose is to avoid the strong stockholder violating the rights of medium and minority stockholders, to improve the interior management level of listed companies and to explore for a feasible plan to improve their achievement and make the investors regain their confidence.This thesis mainly studies of 21 listed companies, because the information is open and the data is easier to access. These 21 companies complement equity incentive mechanism, and their incentive plans have been examined by the CSRC without dissent, been confirmed by stockholders'meeting and approved by the Ministry of Commerce. Firstly, it deduces the forming mechanism of equity incentive effect in listed companies. Secondly, it analyzes the theory foundation of equity incentive. Thirdly, it makes statistical analysis of the choice of incentive targets and explores its rationality by analyzing the data processed. At last, it summarizes and carries out related policies and suggestions.According to the thought above, this thesis composes five parts:The first part is introduction, pointing out the research purpose and meaning, current research situation about equity incentive in and abroad and the research frame of this thesis.The second part is theory research, this part discusses the theory foundation of equity incentive in listed companies: human capital theory, the principal-agent theory ,assignment theory, risk theory, contract theory. On this basis, it then makes the suppose of benign circulation of equity incentive in listed companies.Further more, it discusses the operation mechanism of equity incentive.The third part is statistical analysis. It starts with the choice of equity incentive targets and analyzes the effect on listed company achievement by choosing different incentive targets and different incentive groups.The forth part explores the rationality. Since the third part merely analyzes the effect made by incentive groups, it doesn't involve questions whether equity incentive should be implemented to; whether it is feasible and reasonable refer to every incentive target. In the forth part, it takes the director, high manager, supervisor, independent director, core technician inside to make theory analysis, statistical analysis and explores the effect on company achievement by whether separately complementing equity incentive to them.The fifth part makes conclusion, and presents related suggestions.This thesis makes a research on choices about incentive targets in domestic listed companies. Although lots of discussions have been made about equity incentive mechanism and its effect on company achievement, little research made from the point of equity incentive target. The main achievement of this thesis is the original point of penetration, and feasible suggestions on the choice and incentive of equity incentive target.The main research subjects are 21 companies which complement equity incentive mechanism, and their incentive plans have been examined by CSRC without dissent, confirmed by stockholders'meeting and approved by the Ministry of Commerce. The deadline is at the end of 2006. The sample seems a little small, and the time of complementing equity incentive is a little short. To fill up the deficiency, there chose datum of 1434 listed companies in shanghai and Shenzhen stock markets at the end of 2006. The research on sample company achievement is made through the comparison of the same company in different time and different companies at the same time as well as different groups of selected equity incentive targets.