Case Study Of Equity Incentive Performance Of Chinese Information Technology Industry Listed Companies

According to Modern Management Theory, equity incentive is a kind of effective long-term incentive system and a kind of motivational pattern which meets the long-term development of the modern enterprises. Because of the high intelligence, high growth, high risk and high profitable inherent characteristics of information technology enterprises, the enterprises with equity incentive in the stage of implementation are most in the number in information technology industry at present. Is the equity incentive program design of information technology industry reasonable in our country? What about the implementation effect of the equity incentive program? Doing research on these problems has very important practical significance. In order to provide data basis and case support for the theoretical research and practical behavior of equity incentive, this paper evaluates the equity incentive program of listed companies in information technology industry in our country in the following two perspectives on the basis of the related theory of equity incentive, the system background of our country and the characteristics of information technology industry. And the two perspectives are as follows:the first is evaluating rationality of the equity incentive program of listed companies in information technology industry in our country in incentive pattern, incentive target and incentive effect perspective; the second is evaluating implementation effect of the equity incentive program of listed companies in information technology industry in our country in financial perspective.This paper studies the equity incentive performance of listed companies in information technology industry in our country in the form of case analysis, adopting Financial-Index Method and Event-Study Method to do specific quantitative analysis of equity incentive performance from long-term performance perspective and short-term wealth effect perspective respectively, and selecting two typical cases to do case analysis. Meanwhile, in order to analyze the rationality of the equity incentive program of listed companies in information technology industry in our country, this paper evaluate the cases in incentive pattern, incentive target and incentive effect perspective. This paper makes a comprehensive evaluation of the design and implementation of equity incentive program of listed companies in information technology industry in our country, which explain the effect of equity incentive on the performance of listed companies in information technology industry in our country and the present situation of equity incentive implementation.This paper is divided into six chapters, and the content of every chapter is as follows:The first chapter is an introduction. This chapter introduces research background and significance, research guideline and framework, and research methods and creativity. Under the background of equity incentive policies and human capital demand, equity incentive has been gradually introduced, expanded and further developed in information technology enterprises in our country. Therefore, doing research on design rationality and implementation effect of the equity incentive program of listed companies in information technology industry in our country has very important practical significance.The second chapter is a literature review. This chapter reviews domestic and international documents with the field of equity incentive performance from two perspectives:from the long-term performance perspective, it finds that the research results between scholars at home and scholars abroad make a significant difference, scholars abroad generally argue that equity incentive is related to companies’ long-term performance, however, scholars at home have two different research conclusions, relevant or irrelevant, and the scholars supporting relevant results are in the majority in recent years; from the short-term wealth effect perspective, it finds that scholars at home and scholars abroad make a consensus, which is equity incentive has a positive impact on companies’ stock price, and the short-term wealth effect exists. Furthermore, this chapter reviews domestic documents with the field of equity incentive performance of information technology industry in recent years on the basis of research background.The third chapter is the basic theories of equity incentive and the evaluation methods of equity incentive performance. This chapter introduces two basic theories, which are Agency Theory and Human Capital Theory, and two evaluation methods, which are Financial-Index Method and Event-Study Method.The fourth chapter is the present situation analysis of equity incentive in listed companies in information technology industry in our country. This chapter summaries the present situation and reason of equity incentive in listed companies in information technology industry in our country, and analyzes the overall situation of equity incentive performance in listed companies in information technology industry in our country from long-term performance perspective and short-term wealth effect perspective respectively.The fifth chapter is case analysis. In order to further summarize the present situation of implementation and performance situation of equity incentive in listed companies in information technology industry in our country, this chapter analyzes equity incentive performance in one listed company in information technology industry in our country, and selects two typical sample companies to do case analysis, which are UFIDA Software and ZTE. This chapter analyzes the reasons of UFIDA Software’s imbalance problems between short-term incentive effect and long-term incentive effect from the design of UFIDA Software equity incentive program perspective, and gives some reasonable suggestions to solve the imbalance problems between short-term incentive effect and long-term incentive effect in listed companies in information technology industry in our country.The sixth chapter is the conclusion and outlook. This chapter summarizes the research conclusions and limitations of the present study, then puts forward some problems which needed further study.The main conclusions of this paper are as follows:Firstly, the empirical test of the overall situation of equity incentive performance in listed companies in information technology industry in our country from long-term performance perspective and short-term wealth effect perspective respectively, finds that the long-term performance is significant, but exists great difference in sample companies with different enterprise nature or in sample companies with different incentive pattern, and the short-term wealth effect exists;Secondly, according to the overall evaluation of nineteen one listed companies’equity incentive effect in information technology industry in our country, the equity incentive effect of the nineteen one listed companies makes a significant difference, sixteen one listed companies with positive incentive effect, three one listed companies with negative incentive-effect, and only GaoHong shares with short-term EPS no influence; ZTE and FiberHome, with the profitability and shareholders profitability significantly improving after implementing equity incentive, are the best with equity incentive effect in the nineteen one listed companies; there are imbalance problems between short-term incentive effect and long-term incentive effect in listed companies in information technology industry in our country, especially short-term incentive effect significant but long-term incentive effect not significant;Thirdly, this paper selects two typical sample companies-UFIDA Software and ZTE to do case analysis, and analyzes the reasons for equity incentive effect difference from the design of equity incentive program perspective. According to the contrastive analysis between UFIDA Software and ZTE, the equity incentive effect of UFIDA Software is not well, because at the announcement date for the first time UFIDA Software equity incentive program didn’t have bright prospects from the point of view of the market and investors, UFIDA Software’s business performance fluctuated larger after implementing equity incentive, and UFIDA Software existed imbalance problems between short-term incentive effect and long-term incentive effect; the design differences between UFIDA Software equity incentive program and ZTE equity incentive program are incentive target, incentive proportion and performance examination conditions for unlocking; the reasons of UFIDA Software’s imbalance problems between short-term incentive effect and long-term incentive effect are insufficient incentive towards core technical staff, high incentive proportion and low performance examination conditions for unlocking in UFIDA Software equity incentive program; the high incentive proportion(8%) and low performance examination conditions for unlocking make management easier to achieve the performance examination indicators and gain high equity incentive income, which may show that the motivation of UFIDA Software’s choosing equity incentive is for the purpose of welfare, that is to say the motivation of UFIDA Software’s choosing equity incentive have changed.The main contribution of this paper are as follows:Firstly, since this paper selects twenty-four A share sample companies which have implemented equity incentive programs in information technology industry in our country from January1,2006to December31,2010as research objects.the research samples are very time-sensitive;Secondly, since this paper adopts Financial-Index Method and Event-Study Method to make a comprehensive evaluation of equity incentive performance of listed companies in information technology industry in our country from long-term performance perspective and short-term wealth effect perspective respectively,the evaluation results are comprehensive and reasonable;Thirdly, combined with the overall analysis of equity incentive performance of sample companies,this paper selects two typical sample companies-UFIDA Software and ZTE to do case analysis and draws more comprehensive research conclusions.