An Empirical Analysis On The Effectiveness Of Equity Incentive From The Perspective Of RPE(Relative Performance Evaluation)

Equity incentives is a kind of motivation that which gives the economic rights to the operators, so that they will be able to participate in the enterprise shareholder decision, share the profits, risks, and carry out their duties diligently for the company Early in the80s has been widely application in western enterprise, and made a great success. China gradually into the equity incentives from90s last century, made some achievements, but there are also many problems.As equity division reform and "two"(the listed company equity incentive to manage the way)"(2005.12.31trial implementation) and(state-owned holding listed companies (domestic) to the implementation of equity incentive try out method)"(2006.9.30) have issued, the stock ownership incentive intensified in the listed companies in China. A lot of theory and practice of the scholars began to have to study them. The latest incident is deepening people to think the stock ownership incentive. But from the present research current situation, most works just keep a watchful eye on listed company, that research state-owned listed companies is little. The state-owned listed companies as a special enterprise, should be treated specially Based on this background, this paper tries to research the state-owned listed companies operator equity incentives from the relative performance evaluation perspective to provide reference value for this our country state-owned listed companies the implementation of equity incentive mechanism’s management and perfect.Based on the principal-agent theory, human capital theory, and on the basis of relative performance evaluation method to measure the state-owned listed companies to the stock ownership incentive effectiveness, again using theory and empirical combination of methods and comparison analysis to empirically research our country state-owned listed companies equity incentives validity. And based on the conclusion proposes policy suggestions to implement and perfect our country state-owned listed companies’stock ownership incentive. Therefore, this article will research from the five aspects.The first part The introduction. This paper mainly expounds the research background, theoretical significance and practical significance to the related literature at home and abroad, and expounds the research method, finally describes the content and framework. This part show roughly the ideas in this paper from the whole.The second part The state-owned listed companies equity incentives’ research foundation of theory and practice. Firstly, this part defines two important nouns (management and state-owned listed companies), And then introduce the related theory of Equity incentives, although the equity incentives theory are many, but for the essence, it can be reduced to two theory:the principal-agent theory, and human capital theory. This article mainly introduces the principal-agent theory, human capital theory. Finally describe the actual status of the equity incentives’ development that provide theoretical guidance for the later empirical analysis in this paper.The third part The measures of the state-owned listed companies equity incentives effectiveness:relative performance evaluation theory. How many ways to measure the effectiveness of equity incentives? What are those? From the present research what are the advantages and disadvantages? What is the relative performance evaluation theory? According to the state-owned listed companies, can relative performance be more comfortable to reflect the performance of management, and measure the option incentive effectiveness of the state-owned listed companies?The fourth part The empirical research. of the equity incentives effectiveness of the state-owned listed companies. This part selects the board face trial deep Shanghai stock market data after2006for a series of empirical research.The fifth part The conclusion and prospect. This paper summarizes the main research conclusion, and according to the conclusion of our country state-owned listed companies and the stock ownership incentive status gives relevant Suggestions from different angles Based on this, this paper gives the advances in this paper and the deficiency of the future research direction.The results of the study show that:management performance is only part of the enterprise performance especially in the state-owned enterprise because of the system factor and the uncontrolled factors, both the difference is very big. In introducing a relative performance evaluation and, to some extent, eliminate the market environment, market structure and enterprise resources to the enterprise economic achievement influence, the different indicators is studied, the different results will be. The stronger the monopoly of the industry is, and the weaker the correlation will be.Review mentioned, this paper make innovations in the following areas:1.Topics novelty. Now most of the research which talked are all about the relationship between the listed company equity incentives and the performance of the company, alone talked about state-owned listed companies. But equity incentives have already walked into state-owned holding listed companies, and the particularity of the state-owned enterprise will determine the particularity of its research. Therefore, this paper will research the effectiveness of equity incentive. This rich related research.2.The index that measure stock ownership incentive effectiveness novelty. At present most of the domestic research is not distinguish between the company performance and management performance, considering the particularity of the state-owned enterprise. This article selects the management performance as the index to measure the incentive effectiveness of the stock ownership, eliminate market environment, market structure and enterprise resources to the enterprise economic achievement influence, watch the real effect of the state-owned enterprise’s stock ownership incentive. In order to provide empirical basis for our country state-owned enterprises establishing long-term effective incentive system.3.Introducing the relative performance evaluation theory. Introduced the relative performance evaluation theory, and based on the relative performance evaluation theory and combine the characteristics of the state-owned enterprise sure the relative performance of state-owned listed companies accounting returns from the development of the company, and stock returns three different angle.4.when empirically analysis our country state-owned listed companies equity incentives effectiveness, this paper didn’t directly use preciously existing models, but compare all kinds of regression model, explore the best model. in order to make the result more accurately. To give practical significance to our country and the state holding listed. When studying for the stock ownership incentive of state-owned listed companies, the author deeply felt the research subject’s seconds is boundless. Although the author has done a lot of research and strive, but because the individual is not well understood to the stock ownership incentive. and because personal energy ability is limited, this paper still has the following inadequate:1.The limitations of the study object. In this paper the stock ownership incentive is only for the management of state-owned listed companies, but the problem is not only exist in the state-owned listed company, a private company of state-owned also exist. Because of private companies’ state-owned relevant data is difficult to collect, so this paper research conclusion may apply only to the state-owned listed companies.2.The limitations of the data selection. Because of reform of non-tradable shares starting time is not long, the stock ownership incentive for promulgated by the state laws and regulations also does not enrich and perfect, so a lot of the state-owned listed companies for management equity incentives are still in a wait-and-see condition, which leads to the study sample size is relatively rare.3.The limitations of index selection. This article chooses relative performance as the explained variables, because the financial indexes are difficult to quantify. This paper measure relative performance in selected only choose a single financial index, and don’t construct the overall relative performance evaluation system. Second, the stock ownership incentive factors are very broad, because of the limited knowledge accumulation of the writer, this paper only studies on the part of the control variables, may consider are not all details, all these will affect the accuracy of the results.4.The limitations of the research methods. This article chooses relative performance as the stock ownership incentive limitation alternative variable, but the development of the theory for the relative performance evaluation is only20years, Mostly to research management compensation, almost have been not involved in equity incentives. So relative performance evaluation of the applicability of the theory of the stock ownership incentive needs to be further tested.5.The limitations of the sample material and data collection in the descriptive analysis, and this paper didn’t validate companies enterprise performance’ change before and after the stock ownership incentive state-owned listed.