An Empirical Study On The Relationship Between Equity Incentive And Corporate Performance Of Listed Companies In China

Equity incentive, as a very important kind of modern corporate incentive system, is toreduce agency costs, encourage managers to improve business efficiency and achieve the goalof maximizing corporate value by linking managers’ personal interests and the overall interestsof corporate together through equity. Equity incentive has been widely used in Westerncountries, and obtained a great success. After the completion of the share reform in2005, equityincentive has gradually developed in China. However the implementation effect is not obviousbecause of our country’s specific conditions and our academia has different conclusions aboutthe relationship between the equity incentive and corporate performance.The article selects the listed companies which began to implement equity incentivefrom2010as the object of study, researches on the relationship between the equity incentiveand corporate performance not only based on Contract Theory, Principal-agent Theory, HumanCapital Theory and Incentive Theory but also given to the study results of domestic and foreignscholars.On the one hand, the article summarizes the status quo of Chinese listed companies’equity incentive and finds out the problems to lay the groundwork for empirical study. On theother hand, based on the analysis above, the article proposes three hypotheses, uses correlationanalysis, regression analysis and independent samples T-test method to validate, and then findsout the linear relationship between the equity incentive and corporate performance. At last, thearticle presents the conclusions at follows: equity incentive can improve the performance oflisted companies, but the enhancement is little; there is a weak positive correlation betweenequity incentive shareholding ratio and corporate performance; the equity mode is positively correlated with the performance of listed companies, restricted stock incentive has betterincentive effects than stock options. Based on the conclusions above, the article presents somerelevant suggestions.