The Empirical Research On The Relationship Between Equity Incentive And Corporate Performance Of The Listed Companies In China

With the formally implementation of the measures governing equity incentive plans of listedcompanies and the improvement of relevant laws and regulations about equity incentive programs inour country, more and more listed companies start the utilization of equity incentive plans. As along-term incentive method, equity incentive grants a certain number of equities to the operators inorder to combine their interests with the shareholders’ interests, also encourage them to overcomeshort-term behavior and thus pay more attention to the company’s long-term development. The equityincentive can help solve the principal-agent problem between shareholders and managers and improveoperating efficiency in a certain degree, and one of the most important problems for measuring itseffect is how to set up a scientific and rational corporate performance evaluation system.The paper first discussed the implementation of equity incentive mode by introducing relevantequity incentive theories and synthesizing domestic and overseas research, including structuralbackground, incentive mode, nature of the enterprises, stock sources and industry distribution of thelisted companies which have launched the equity incentive scheme. Then the paper made an empiricalresearch on the relationship between equity incentive and corporate performance of the listedcompanies that have announced the implementation of equity incentive plans between2008and2010.The paper selected several indexes that reflected the debt paying ability, operation ability, profitabilityand development ability of the listed companies, using the factor analysis method to establish aperformance evaluation model to get a comprehensive corporate performance evaluation value, in thefollowing part, it took the proportion of stock that used to execute equity incentive as independentvariable and introduced some control variables to do multiple regression. The paper is supposed tofind out the relationship between equity incentive and corporate performance as well as providereference for the design and improvement of the equity incentive system.Through the empirical research, this paper drew the conclusion that there was a significantlypositive correlation between equity incentive and corporate performance of the listed companies inChina, which shows that equity incentive plays a positive role in the management of the listedcompanies. Finally, the paper put forward relevant countermeasures and suggestions to perfect theequity incentive mechanism of listed companies.