Equity Incentive And Corporate Performance

After more than20years of development of China’s securities market, securities market has been an important part of economy system and capital markets.At the same time, Our equity incentive system is at an early stage of development.After the split share structure reform.The implement environment for stock ownership incentive of our country. An increasing number of listed companies are starting to implement equity incentive. But owing to the late establishment of incentive system in our country, related study on the incentive effect of the conclusions are also inconsistent. The view was expressed that incentive to improve the company’s performance, and reduces power of Manager’s earnings management. Some studies indicated that equity incentives will damage caused earnings management and corporate performance. Some studies indicated that equity incentive had no apparent effect on the implementation of corporate performance.Since the equity incentive is often accompanied by earnings management.So this article studies the relationship between equity incentive and corporate performance from the perspective of earnings management. This paper first describes research background and significance of equity incentive and company’s performance and describe the basic frame of the paper.Then this paper summarize the related studies about equity incentives and earnings management and corporate governance. Noted that the focus of current research results and possible areas for improvement. And briefly describe equity incentives and earnings management of Chinese listed companies.Then this paper proceed an empirical analysis.This paper select957list companies between2008and2011in China. The empirical results are as follows.1.When corporate performance is not adjusted by earnings management,there is a positive correlation between equity incentives and corporate governance.2.After corporate performance is adjusted by earnings management, the positive correlation between equity incentives and corporate governance gets weak.3.For the non-State-owned companies, equity incentive has a negative but not significantly impact on non-State-controlled listed companies after corporate performance be adjusted by earnings management,.While equity incentive has a positive and significantly impact on State-controlled listed companies after corporate performance be adjusted by earnings management.We can conclude that equity incentive could improve the performance of State-owned listed companies.4.After adjusting corporate performance by earnings management, Listed company’s equity incentive plan is passed or not does not have a significant effect on corporate performance.