A Study On The Correlation Between The Equity Incentive And The Listed Companies’ Value

Because of the separation of the ownership and the operation of the modern enterprise system, the equity incentive comes into being. In the western countries, the equity incentive mechanism has got a long period of development. The equity incentives was formally introduced into China in the late20th century, and got its specific development since2005when the SFC issued "the management approach on the equity incentive of the listed companies (trial practice)". Equity incentive in the world has been recognized and promoted widely, which means it has its own practical significance. In view of this, the author hopes to ascertain the effect of the equity incentive mechanism on the corporate value of listed companies in China.In this paper, the author uses a method of combining theoretical analysis and empirical test, to study the relationship between the value of China’s listed companies and the equity incentive plan. The author firstly analyzes what kinds of the companies would prefer to implement the equity incentive. Secondly, the author handles in the short-term and long-term aspects to explore the effect of the equity incentive plan on the value of listed companies. In the short-term analysis, the author mainly uses the Paired-Sample T Test, to find out whether the equity incentive plan will enhance the short-term wealth of shareholders of listed companies. In the long-term analysis, the author makes a comparison in the development capacity and the profitability of the samples companies before and after implementing the equity incentive plan. The author also divides the sample companies according to industries, and then carried out a comparison between the sample companies and the other companies.After all the analysis, the author finally gets the conclusion of the text.This article includes five parts. In the first chapter, the author introduces the significance of the research and some background knowledge of the equity incentives to readers, and sorts out the framework and idea of the article. The second chapter is a literature review section; the author makes a literature summary from foreign and domestic aspects. Chapter three introduces some relevant theoretical knowledge with the equity incentives. The fourth chapter is the main part of this article. It is divided into short-term analysis, long-term analysis and OLS test, and finally arrived at certain conclusions. In the fifth section, the author clarifies the conclusions, the limitations of this study and future directions for improvement.The main contributions of this paper are the following aspects:First of all, the author makes a more comprehensive analysis on the effect of the equity incentive on the corporate value from the multi-level and the multi-angle;Secondly, the author makes a division of the sample companies according to industries, to find out the effect of the equity incentive plan on the value of listed companies in different industries.The limitation of this article is the sample size limitations in the division of industry research.