Research On The Correlation Between Executive Equity Incentive And Corporate Performance In The Listed Company

The2008financial crisis has caused a certain degree of impact on many aspects of our economy, which has not disappeared, especially in the stock market. Take the Shanghai Composite Index for example, it fell from6124.04points in October2007to2033.31points on March31th2014, a drop of more than60%since2007. In contrast, equity incentive in China’s listing company is developing rapidly. From January2008to December2013, there are499listed companies announced equity incentive plan. The incentive target involved executives accounts for95.36%of the total. Therefore executives are undoubtedly the leading role of equity incentive in listed company. And both academics and listed companies are very concerned about how these equity incentive effect.There are many existing studies ignored the influence of executive characteristics and the factor of equity incentive plan’s design in studying the effectiveness of equity incentive of listed company. Based on the above background, this paper selected286listed companies which announced the executive equity incentive plan from January1st2008to December31th2012as the sample data, to research the influence of equity incentive on corporate performance by regression analysis form the view of executive characteristics and the factor of equity incentive plan’s design. This paper contains5chapters:introduction, related concepts and literature review, research design, empirical research, conclusions, suggestions and future research direction.The findings show that:in China’s listed companies that carried out executive equity incentive, there exists a significant positive correlation between corporate performance and equity incentive intensity. Executive age, educational background, shareholding ratio and cash salary, all have impact on the effectiveness of equity incentive of listed company. Also, the equity incentive plans of the restricted stock mode or the valid period within5years achieve better incentive effect overall. Through research, this paper hopes that these results can provide some reference for the practice of executive equity incentive in listed company.