The Study Of Company Equity Incentive Effects And Its Influencing Factors

This article is to research the relationship between equity incentive and company performance, to analyze the factors which influence the results of equity incentive, so as to measure the validity of equity incentive institution in Listed Companies of China, on the background of share reform implementing four years in Chinese market.By selecting the Listed Companies in 2008 who disclose the detail rules on equity incentive as our subjects. For the financial indicators of the sample companies in 2007.2008.2009,we use the principal component analysis getting the company's composite score factor which can measure the company's performance, making a comparative analysis between the sample companies performance in 2007 and 2008,2009;then we use the executive shareholding ratio, Composite score, and other related financial data by regression analysis to detect the short-term and long-term sensitivity between executive equity incentive and corporate performance, so as to test a"range effect"existing between this two factors or not, and analyze which external and internal factors influence the result of equity incentive's implementation in the sample companies.After a series analysis we conclude that: First, sample companies'performance has improved significantly after equity incentive implementation but there was no significant correlation between them; second, the equity incentive institution is ineffective in promoting companies'performance ,it has not achieved the theory expected results; third, there is no obvious sensitivity between equity incentive and company performance; fourth, although the implementation of equity incentive is invalid in china's listed companies, but"range effect"exists, the equity incentive and company performance plays a proper incentives effect when the executive shareholding ratio more than 5%;Fifth, when the factors that effects the proportion of executive shareholding enter into the equation we found that: company size, industry, area, proportion of controlling shareholders equity all have an influence on executive shareholder ratio, but the financial leverage almost no effect. In which the proportion of controlling shareholders and company size show an obvious effect, in addition to real estate and comprehensive industry, others industries did not pass inspection. Because most of sample companies located in developed area, the regional factor also passed the test.