Enterprise Group Equity Incentive And Corporate Performance Research

As an important form of organization, aiming at optimizing the assignment ofresources, business groups which are universal in emerging markets have playedprominent role in the transition economy and become the dominant force in thedevelopment of domestic economy and global competition. At present, China is stillin the transition economy from planned economy to socialism market economy.Business groups have been founded, formed and developed under the force ofgovernment since 1980s and now they have become the most significantorganizational form to lead the development of national economy, playing more andmore remarkable role in the social and economic life. With the developing of thereform of Chinese economy system, business groups, representation of the strenth ofnational economy, have the important task to develop domestic economy vigorouslyand to take part in the international competition. They are facing rigorous challenges.In an frame of opening-up market economy, how to enhance the competences ofChinese business groups and keep their healthy and sustainable development is aproblem which needs more attention of the theoretical and practicing field.An amount of foreign and domestic scholars in different fields have done a lot ofresearches on business groups in different perspectives. Most of these studies arequalitative and case studies, with few quantitative empirical achievements. This studyis to analyse the relationship between the extent of internal ownership motivation andorganizational performance in business group in the perspective of ownershipmotivation. Ownership motivation system, one of the most impormant corporationgovernance systems, can unify the interests of managers and shareholders throughendowing managers with an certain number of shares, solving the problem of conflictof interests between clients and agents. Ownership motivation may decrease proxycosts, motivate intelligence and careerism of managers, transform the managementsystem and improve the human resource situation and eventually increase theperformance of company and fortunes of shareholders.Based on the preceding studies and own research design, after setting up studyframe and theory hypotheses, this paper adopted the method of empirical researchthrough all 651 business groups from Shanghai and Shenzhen stock market as thesample data, and utilized SPSS to carry on data analysis and examining. Through regression analysis and hypothese examination of the three years' sample data from2003 to 2005, the paper analyzed the effect of internal ownership motivation on theperformance in business groups. The results show that in Chinese business groups,there is a liner positive correlativity between the extent of internal ownershipmotivation and the performance of business groups, which reflects the effect ofcovergence of interest. There is another founding that the relationship between thepercentage of the managers who have some internal ownership and the performanceof business groups acts as an obvious U-formed curve, which means the performanceof business groups first decline with the increasing of the percentage of the managersowned internal ownership, then move up. The outcomes of this study will providesome advices for the system of governance and motivation of business groups and canbe used for reference by government to develop domestic business group. At the endof the paper, the limitations of research and further research directions have beenpointed out.