Empirical Research On Relation Between Equity Incentive And Corporate Performance Of The Listed Companies In China’s SME Board

In order to speed up the building of the multi-level capital market, our government found the SME board in the Shenzhen Stock Exchange market in2004. The creation of the plate provides a platform for many small and medium-sized companies which have a fast revenue growth, a strong profitability and a highly technology content. In the early1990s, our country began to introduce the system of equity incentives, The essence of incentive stock options is a claim of the residual income. The foreign scholars studies shows that the equity incentive plays an important role in reducing the agency costs, improving the agency relationship, and improving the company’s operating results. The SME board started the equity incentives in2006, and one hundred and thirteen companies have launched the Equity Incentive Plan, Although some companies terminate its equity incentive plan, the concept of equity incentives is being accepted by more and more enterprises. This article selects research samples in the SME board which retrieved from the year from2006to2010.The purpose of this article is researching the relationship between the equity incentives and the operating results of the company,the study found that there is a significant positive correlation between the equity incentives and the operating results of the company, and in the assessment of the operating results of the company, excluding the non-recurring items and the macroeconomic environment is more reasonable.In of course of the study, this article put forward the research ideas, methods, research contributions and shortcomings in the first part, Review and summarize the research literature in the second part, Describe the theoretical basis of the equity incentives in the third part, Describe the present equity incentives Status in the Fourth part, The fifth part is empirical analysis and the last part is the empirical results. The main content of the six parts are as follows:The first part is introduction, This part primarily introduce the research ideas, methods, research contributions and shortcomings.The second part is literature review. This part primarily review and summarize the research literature of the domestic and foreign scholars.The third part is the theoretical analysis. Mainly introduce the concept of the incentive stock options、theoretical basis and the evaluation indexes of the performance of the companies.The fourth part is the present status of the equity incentives, This part primarily introduce the implementation of the equity incentives and the operating results of the equity incentives companies.The fifth part is the empirical research component. This part contains the hypothesis、descriptive statistical analysis、independent variables correlation analysis、regression analysis and robust Analysis.The sixth part is the research results and policy recommendations. This part primarily introduce the research result, On the whole, the equity incentives is effective in the SME board, there is a positive correlation between the equity incentives levels and the operating results of the companies. The higher level of the equity incentives, the better operating results of the companies. Based on the research results, the article proposed policy recommendations from both microscopic and macroscopic aspects. Then the article prospects the future research direction.The main contribution of the paper performance in the following aspects:(1) In the measurement of the performance of the company, The article select two indexes, The first is Weighted average return on net assets after deducting non-recurring gains, The second index deducted the impact of macroeconomic environment in the foundation of the first index. This paper argues that in the assessment of the performance of the company, deducting the non-recurring gains and the influence of the macroeconomic factors in more reasonable.(2) In the measurement of the level of the equity incentives, this paper selected the proportion of the equity incentives as the main index, and consider that selecting the management shareholding percentage as the measurement of the level of the equity incentives is unreasonable.(3) In the descriptive statistics of the variables, the article selects the weighted average return on net assets after deducting non-recurring gains under the consideration of the impact of the macroeconomic factors as the measurement of the performance of the company. The paper makes descriptive statistical analysis on the performance of the companies by year based on the compartmentalization of different industries and different equity incentives patterns. When the size of the sample companies is small, it can reflect the changes in the relationship between the performance of the company and the equity incentives.The deficiencies of the study may exist in the following aspects:(1) The research object of this paper is the equity incentives companies in the SME board. Since the market created relatively late, the number of the equity incentives companies is relatively small, it may reduce the persuasive of the research results.(2) In of descriptive statistics part, The paper makes descriptive statistical analysis on the performance of the companies based on the compartmentalization of different industries and different equity incentives. in the descriptive statistics of the different industries, this paper Lack the Performance statistics of the year before the implementation. It may result in the change of the performance of individual industries not significant.In the descriptive statistics of the different equity patterns, On the number of samples, neither the patterns of the combination of stock options and restricted stock nor the combination of stock options with stock appreciation rights is small, it may reduce the persuasive of the research results.(3) Some studies show that there exits non-linear correlation between the equity incentives and the company’s operating results. In the different equity incentives levels, there exists different correlation. In this paper, the main Research variables is the proportion of equity incentives, the proportion of the equity incentives is relatively concentrated in the SME board, so this paper didn’t divide the interval of shareholding percentage. Whether there are "range effect" between the equity incentives proportion and the company performance, this paper is lack of making a deeper research.