Study On The Effect Of Equity Incentive System For Chinese Listed Companies After The Non-Tradable Shares Reform

The implementation of equity incentive system is to stimulate managers to make thegreatest efforts to improve the corporate performances，impel interests of the owners andoperators tends to be uniform, and this system is considered as an important way to solvethe principal-agent problem to modern enterprise.With the improvement of China’s capital market and enterprise system, theoreticalcircle and practice circle pay more and more attention to equity incentive. Plenty ofresearches on equity incentive have been made all over our nation, but the relationshipbetween equity incentive and company performance did not reach a unified conclusion.Before the stock share reform, equity incentive is mostly in the form of legal person shareand employee share, this actually is a kind of corporate welfare, rather than the real senseof equity incentive. After the stock share reform, China’s capital market to receive the fullcirculation. The introduction of our country’s Company Law revised in2005eliminate thebarriers to restricted stock source, whether it is institutionally or legally cleared the way forthe implementation of equity incentive. So after the stock share reform, research on theimplementation of equity incentive will enhance or don’t the performance of listedcompanies is more meaningful.This article selected the implementation since2006of equity incentive of the listedcompanies, excluding the listed companies has terminated the implementation of equityincentive, research whether corporate performance of listed companies after theimplementation of equity incentive will be raised. Firstly, the background and significanceof the implementation of equity incentive is explained theoretically; Secondly, analysis ofthe effect of the implementation of equity incentive, puts forward four relevant hypothesis,and the hypothesis is validated through horizontal and vertical contrast, and regressionanalysis. Through empirical analysis we found that the implementation of equity incentivepromotes corporate performance (accounting profit). To some extent the implementation ofequity incentive played a positive role to managers, but return on equity incentive to EVA of ascension is not obvious, or even a declining trend. Because this indicator evaluate theperformance from the perspective of value creation, the empirical results also illustrate theimplementation of equity incentive not creating value for the company in a great degree;Finally, analysis cause for the effect of the implementation of equity incentive, and putforward policy suggestions that can improving equity incentive effect of executives.This study is based on the new system and the background that capital markets toachieve full circulation, whether from the law level or institutional aspects of speaking,China’s capital market has a great degree of perfection, so I choose data samples after thestock share reform, and research on the implementation of equity incentive will or notenhance the value of listed companies are more valuable. Most scholars’ researchesrelationship between the proportion of managerial ownership and corporate performance,the source of managerial ownership is complex, and incentive stock options fail to reflectthe stake. The proportion of managerial ownership is more a form of welfare rather than areal form of incentive, so this paper adopts the proportion of incentive as the evaluationindex and introduces the EVA, which evaluation of performance will be more objective.