Equity Research Questions Listed State-controlled Companies, "second Five" Incentives

According to the principal‐agent theory, incentive theory, human capital theory, property rights theory, and the modern enterprise management theory through western and Chinese scholars, it’s been proved that implement equity incentive to corporate executives, to make them became the shareholders of the company, is the effective way to motivate executives. We passed more than ten years on the way to search the equity incentive. This article focuses on the development of equity incentive, the factors that affect equity incentive, the problems that it brings, and the solution in the future.This paper studies the equity incentive problems in state‐owned enterprises with literatureand case analysis. First of all, the paper analyses the operation principles of equity incentive and the necessary conditions for it, then take a research for the development and current situation of equity incentive in state‐owned enterprises. After that, we analysis the status via macro and micro level according to the exist issues. Meanwhile, we take two examples to declare the problems that exist in the implementation of equity incentive. At last, we present the recommendations for the development and the improvement.Since the reform and opening up, although our government pushes the reformation of state‐owned enterprises, but the modern enterprise system and the stock market that shaped under the circumstance of planned economic system and ownership by the whole people didn’t reach their goals when compare with Europe and America. From the macro level, the systemic of the policies and regulations and the capital market mechanism should be adjusted. From the micro level, the governance structure of corporate and the design of the performance appraisal system are issues that should be noticed by government when they carry on equity incentive among state‐owned enterprises.