Research On The Relationship Between Equity Incentive And Corporate Performance Of Public Company In China

Equity incentive, as an important part of corporate governance, is considered asgolden cutoffs to inspire and restrain the staff. As a long-term excitation mechanism,equity incentive can encourage the managers and core staff to work hard, improve thecorporate performance and maximize the shareholders’ wealth. At the same time, equityincentive system can closely connect the staff’s personal interests and corporatecollective interests, so to reduce the ethical risks, avoid the short-term behavior andsupervise the managers’ act. However, equity incentive, as a rapier, can also bring aboutbad effects to the corporate value without proper use. Therefore, can equity incentivereally improve corporate performance and how well does it work? It is very necessary forus to probe into these problems.This article has chosen the relationship between the equity incentive and corporateperformance as the research top, used many research methods including standard study,empirical study, qualitative study and quantitative study to do the research. First of all,this article introduced the definition and related theoretical basis, explained therelationship of equity incentive and corporate performance from the theoreticalperspective. Then, the article reviewed the background and introduced the currentsituation of equity incentive in China. Afterwards, the article collected46publiccompanies which have carried out the equity incentive policy from2006to2009as theresearch samples and conducted the empirical analysis based on the paired samples T test,multiple linear regression and independent samples T test. Finally, this article reached thefollowing conclusions: the first one is that after the implementation of the equityincentive system, the corporate comprehensive performance has been improved, but thebenefit is not obvious. The second one is that there isn’t an apparent association betweenthe incentive ratio and ROE*.The third one is that different incentive mode will make aninfluence on the incentive effect. The fourth one is that different incentive period ofvalidity will also influence the incentive effect.This article mainly includes six parts: the first part is introduction, including theresearch background, research significance, literature review, research thought and research methods. The second part is overview of the related theory of equity incentive,including the introduction of the relevant concepts and interpretation of the theoreticalbasis. The third part is the development process of equity incentive in our country’spublic companies and the status quo analysis. The fourth part is the research design,including proposing the hypotheses and setting the variable, etc. The fifth part isempirical analysis. The sixth part is conclusions and recommendations.