Study On The Equity-based Incentive Policy And Corporate Performance Of Listed Companies In China

An important feature of modern enterprise system is the separation of corporate ownership and the right of management, this special system leads to the different targets between the owners of the company and the company managers which is called agency problems. To solve the problem of agency, western countries firstly put forward a long-term incentive system-the equity-based incentive policy. The equity-based incentive policy make the company’s managers participate in the company management activities from the view of the shareholders of the company by assigned the managers some part of the company shares and economic rights, so that the managers share the profits and risks the same time, then they can doing the business from a long-term point of view.This incentive system has been widely used in the foreign market, becomes an important system to incentive and restraint the managers in the foreign listed companies. The implementation of this policy began in the1990s in China when the practice of China’s listed companies is very little, this policy was still in the exploration stage.2006is an important year in the process of implying the equity-based incentive policy. With the equity division reform in2005and the implementation of the two copies of equity incentive policy guidance published by the commission in2006, the economic environment and legal environment of the listed companies in China has been changed greatly. So, the studies on the implementation effect of the incentive policy in the new economic situation have the important meaning.The study objects of this paper are the listed companies which declared and carry out the equity-based incentive policy from2006to2011.By the collected data of the listed companied, there are79companies in this stage of the implementation of equity incentive policy, eliminate the listed company which has the anomaly and incomplete financial data, there are67listed companies. Based on the requirements of the inspection sample numbers, this paper does not separate the study samples by the industry segments in order to certain the empirical results effect. To compare the improvidences of the corporate performance by the implementation of equity incentive policy, we select a comparison companies which dose not imply the equity-based incentive policy for every research sample. The selection standards are:Firstly, compared to the research samples, the matching samples are in the same industry, the industry standard was issued by the China securities regulatory commission; secondly, the research sample and matching samples has the most closed total assets book value in the same year, in order to ensure that the study sample and the matching sample company has the similar scale, so that the influence of the study by the difference between the two parts can be reduced.This paper uses the normative research system to analysis the theory, the empirical study system to analysis data. The study on the relationship of the implementation of equity incentive policy and corporate performance based on the financial data provided by the capital markets after2006.This paper is divided into the following five parts:The first part is the introduction, mainly expounds the research background, the research methods, writing methods and the innovation points and major contribution of this paper.The second part is the literature review and the theory analysis. According to the foreign research results, we reviewed the domestic and foreign literature and respectively expound the different views of the theory; then give the definition of the subject-matter on to the equity-based incentive policy, by the literature review; we give the reference for the fourth part.The third part is the statistical description of the china listed companies which implied the equity-based incentive policy. The investigation samples were separated by the industry, the company scale, the equity properties, and the length of the equity-based incentive policy and the performance evaluation system. The results showed that the implementation of equity incentive policy is different in China.The fourth part is the focus of this article, the empirical analysis section. Based on the theoretical analysis and the literature review in the second part, this paper firstly puts forward three research hypotheses:suppose one:the company performance improvement was significantly higher in the implementation of equity incentive policy of the listed companies than the comparing samples which dose not imply the equity incentive policy. Hypothesis2:the improvement of the performance and the implementation of equity incentive policy was significant correlate. Hypothesis3:different equity incentive model has different incentive effect.The fifth part firstly got this three research conclusion:first, the implementation of equity incentive policy can actually bring the improvement of the corporation performance; second, there are some differences between equity incentive policy effects of different equity incentive model; third, the implementation of equity incentive policy and the improvement of company performance have significant positive correlation. And then in the comprehensive of the theory analysis and descriptive statistics, we put forward some relevant policy suggestions in this paper:one is to improve the capital market, enhance the efficiency of capital market; second is the more developing of China’s manager market; the last is to improve the management performance evaluation system as soon as possible.The innovation points of this paper are mainly in the following aspects:(1) The study objects of this article are the listed companies that declared and carried on the implementation of equity incentive policy, by removing the only declared study objects, and we can get more accurate studding results.(2) The evaluation index of the company performance is very different to the previous academic research. In addition to the reaction index of the companies’ profit ability, this paper choose the growth rate of total assets and operating income growth rate to evaluate the company’s long-term development capacity, so that the company’s performance can get more comprehensive evaluation.Because of the limits of time, research sample numbers and the author’s research level, this paper still has the following several shortages:(1) there are only67listed companies as the sample empirically, due to the limitation of sample size, the empirical analysis result may have some certain deviation, could not fully reflect all of the information.(2) The equity-based incentive policy was a long-term incentive system, so the incentive effect could not get full embodiment only after a long period of incentive. Because the time of China’s listed company carries out the equity-based incentive policy is short, so the short-term financial data can’t fully comprehensive the corporate performance improvement.