The Research On Relativity Of The Managerial Equity Incentive And Corporate Performance Based On Empirical Evidence Of The It Industry

As a long-term incentive mechanism, the managerial equity incentive arose after the separation of ownership and management. This mechanism can mobilize the enthusiasm of the management and combine the interests of the shareholders, enterprise and individual proprietor, reducing the agency cost and enabling the managers to pay more attention to the long-time development of the enterprise. Since the middle of the 20th century, the managerial equity incentive has been developed in a fast speed in western countries. According to the statistics, 90% of all the listed companies in the United State implement the managerial equity incentive,especially high-tech companies in Silicon Valley. Such a system has achieved remarkable results in the development of high-tech industries.The equity incentive practice started in 1990s in China. Since then, before the completion of the split-share reform, the equity incentive practice has been in an exploration stage in China as a result of restrictions on the capital market environment, legal system as well as accounting system, etc. After the completion of the split-share reform, the long-standing problem of dual-class equity structure in China's capital market was solved, and full circulation of equity has been realized. Meanwhile, as the new accounting standards and the equity incentive in listed companies and other regulations has been promulgated in China, equity incentive practice environment has undergone major changes and a new phrase came. Therefore, this thesis starts the research of the relationship between the managerial equity incentive and corporate performance.The thesis first reviews the relevant researches at home and abroad, and then points out the shortcomings in empirical research at home. Then it reviews the two basic theories including Principle-agent Theory and Human Capital Theory. Based on these two theories, this thesis puts forward the hypothesis of this research.The thesis selects the data of 144 listed companies in 2007 and 2008 in information technology industry, a much more competitive industry.Then it conducts an empirical study on the subject. According to the result, there is a significant positive correlation between the proportion of managerial equity incentive and corporate performance. In addition, asset-liability ratio, firm size, the largest shareholder equity ratio also affect the implementation of the managerial equity incentive. Moreover, the thesis conducts the research of the components of management buy-out including board of directors, board of supervisors and the managerial. The result shows that apart from the board of supervisors, the other two show a significant correlation to corporate performance.