Research On The Status And Utility Of Implementation Of Equity Incentive For Listed Companies In China

Modern enterprise separation of ownership and management problem has directly caused the problem that how to encourage the operators to service for maximizing the profit goal of owners. As a long-term incentive mechanism, equity incentive connects the operators'personal gain with the interests of company by granting the operators a certain percentage shares of the company, which is designed to motivate managers to work hard, and then improve the performance of company. Compared to the great success and wide recognition gained in western, China's equity incentive practice started late, and the early development situation is not ideal which is due to regulatory and institutional constraints. The equity division reform of China's capital market in 2005 has removed the institutional barriers of implementing equity incentive in China, and "rules" issued and implemented pulled off the prologue of a standardized equity incentive which marked the true sense of the practice in China. A following series of policies and regulations make equity incentive sophisticated at the policy level, so as to speed up the practice and promotion in China. In all, equity incentive will an important issue concerned by the theory and practice by a long-term.Domestic and foreign scholars have conducted extensive research based on whether equity incentive has played the effectiveness in practice as expected by theory. Domestic previous studies have not reached a consensus because of the different research time, method and selected sample data, which not only provides a valuable reference, but also lefts a lot of research space for the following study. With the rational return of community understanding on the equity incentive, its effect and role in the new system and policy environment needs to be tested. How to implement equity incentive mechanism in China, how to regulate the incentive system and optimize incentive programs, which has practical value for the follow-up implement of China. Summary the status of implementation of equity incentive for Chinese listed companies, and then tests the practical applicability of equity incentive mechanism in China, are the purposes of this paper.The content will be launched according to the following six parts:the first part establishes the theoretical and practical value by describing the research background, and then proposes the research ideas and content framework on the base of specifying the research purposes; the second part understands the research results and development trends through the collection of domestic and foreign literatures; the third part defines the basic concepts of equity incentive, and then expounds the related theories, focusing on the definition and measure of the effectiveness of equity incentive; the fourth part understands the system background of implementation for Chinese listed companies, and on this basis, comprehensively statistics and analysis the status of implementation of equity incentive; the fifth part studies the effectiveness by empirical method, conducive to whether the implementation of equity incentive is helpful to enhance the performance of listed companies and how much impact it has bring; the last part summarizes the conclusions, and gives policy recommendations for the problems in current implementation process of equity incentive.This paper concluded that since equity incentive standardized in 2006, the implementation showed a certain degree of choice tend, and the disclosed equity incentive plans have significant characteristics. Standardized implementation of incentive have achieved some success which is worthy of recognition, but the play of long-term effectiveness is still to be seen. The continued practice and promote of equity incentive in China's listed companies depends on the support for the laws and regulations, and reasonable designed equity incentive plans are able to effectively promote the effectiveness of equity incentive to play.