The Management Equity Incentive Effects On Company Performance Research

This paper attempts to combine China’s national conditions and local implementation of the incentive stock options into the study, selecting a more comprehensive and realistic point of view to build an empirical model to test the hypothesis, finally to explore the relationship between senior management equity incentive plan and the corresponding results of listed companies. On the basis of the past Chinese and Western theoretical research on equity incentives, we reviewed the history and exploring the situation of the development of China’s equity incentive implementation. Then, we did a theoretical analysis on equity incentives and its impact on the performances of listed company, summed up the implementation of equity incentive program with the Interests of the corporate performance of convergence effect, the expected returns effect, dig the trench of auto orphic effect and range effects. In empirical analysis, first of all, we raised8the assumptions that influence the corporate performance. As for the variable selection, we use earnings per share EPS as the variable to be interpreted, and the senior management ownership as the explanatory variable. Then we introduce firm size, leverage, growth, operational capabilities, state ownership, ownership concentration and human capital factors as seven control variables into the model. Especially, we take into account the human factors, human capital dependence, for the first time, using the log of employee benefits payable to express as a indicator, in order to get the empirical result as accurate as possible.In this paper, we select the relevant data of the Shanghai and Shenzhen stock markets from2005to2011A-share listed company, including operating financial data and equity incentive data as the sample data (1747samples), to build nonlinear models and linear models for regression analysis and statistical tests. We use Granger causality test to explain the causal relationship between corporate performance and the implementation of equity incentive.After the empirical analysis, the conclusions are as follows:(1) Through the Granger test, we found out the senior management ownership MO variable is the Granger cause of the earnings per share EPS, certainly explaining the impact of the interests of the convergence theory.(2)After constructing and comparing the linear quadratic model and a linear model, we concluded that there is "a positive linear relationship between management equity incentives and company performance of Chinese listed companies.(3) for the control variables obtained in the empirical analysis:the company’s size and performance of the company was in a significant positive correlation; the company’s leverage indicators of asset-liability ratio and the performance of the company was in a significant negative correlation; the company’s total asset turnover and operating results showed a significant positive correlation; the proportion of state-controlled and the company’s results showing a negative correlation; company operating performance and equity structure of equity concentration showed a positive correlation; company performance and dependence on human capital also showed a positive correlation;(4) The assumption "larger the growth of company, better its operating results will be" has not been supported in empirical analysis, which indicates the growth and performance of the company listed companies in China showed no significant relationship.Finally, we raised cause analysis and policy suggestions based on empirical results.