The Research On The Effectiveness Of Executive Stock Ownership Incentives In Our Listed Companies

An important feature of modern enterprise system is the separation of ownership and management. Separation of the power has led to principal-agent problems. An effective way to solve the principal-agent problem is to establish an effective incentive and restraint mechanisms, allowing agents with the client's interests consistent, and let the operator have a certain percentage of equity is the most direct and most effective method to coordinate the interests of managers and shareholders (Zhang, 1999). With the split share structure reform in China basically completed and the capital markets gradually improved, more and more companies begin to implement stock ownership incentives to executives, and more and more scholars begin to study the effectiveness of stock ownership incentives.Despite the domestic and foreign scholars have done a lot of empirical analysis on the effectiveness of executive stock ownership incentives, in reality, the validity of the incentive mechanism in actual implementation still exists a large controversy. In this paper, we use 2006-2008 data for a sample of 42 listed companies that have implemented executive stock ownership incentives in those years, and select the index of return on net assets excluding industry factors to measure the corporate performance. We analyze the performance differences between before and after implementation of executive stock ownership incentives in listed companies, as well as an empirical analysis between the proportion of stock ownership incentives with it, in order to study the effectiveness of executive stock ownership incentives of China listed companies.Through empirical research, we can make main conclusions as follows: a better performance of listed companies are more inclined to implement the operators of stock ownership incentives, the effectiveness that executive stock ownership incentives of listed companies promote the performance of listed companies is not obvious. At present, stock ownership incentives in China listed companies did not play its due role in long-term incentive. From the perspective of industry, the number of operator stock ownership incentives in manufacturing companies are most; From the perspective of the model of stock ownership incentives, a larger number of listed companies take stock options model; From the type of ownership, the number of operator stock ownership incentives in private operators is greater than the state-owned enterprises, but their effectiveness is also better than the state-owned listed companies. Company size,financial leverage, managers monetary remuneration,business growth and Ownership Concentration will affect the effectiveness of the implementation of stock ownership incentives. Among them, the effectiveness of stock ownership incentives has a positive correlation with business growth, but a negative correlation with company size, financial leverage, managers monetary remuneration and Ownership Concentration.Finally, according to empirical results, we propose policies and suggestions about how to enhance effectiveness of executive stock ownership incentives of listed companies in China, such as standardize and improve the stock market, improve relevant laws and regulations about stock ownership incentives, Improve the Remuneration Committee system of listed companies and determine exercisable standards rationally. From those suggestions, we can provide some useful inspiration for construction of stock ownership incentives of listed companies in China.