Sme Equity Incentive Research

The essence of modern enterprise can be explained as the basic economic unit which is contracted by Labor and Capital. There are 2 kind of theory through which the reason of Equity incentives got illuminated, The Human capital and the principal-agent theory. The practice of Equity incentive has proved extremely fruitful at both international and domestic level, however, Small and medium-sized enterprises in China has experienced a special difficulty time for the economic reform of the country is still on the way and many rules and laws are still lack of existence. This essay give the basic theory of equity incentives a dramatically clear and thorough pectination and give a good try probe into the problem of how to use the equity incentives as the good way of Corporate Governances for the millions of small and medium-sized enterprises in china under shock of the global financial crisis.