Empirical Analysis About Executive Incentives’ Impact On The Company Performance In Listed Companies Of China

Equity incentive came into being in the1930s in the United States which has had a history of80years, and in recent years has obtained the rapid development. It is an important part of theory research and practical application of modern enterprise corporate governance theory. With the continuous improvement of principal-agent theory, contract theory, human capital theory and other related theoretical system, equity incentive acts as a long-term incentive mechanism to solve the principal-agent problem and conflict of interests between managements and shareholders; it has been well accepted and acknowledged after the practice examination of the United States and other developed countries.The article firstly systematically expounds the development processes and related theories of the equity incentive system, sums up the opinions and research methods on domestic and foreign literature about the equity incentive system. Based on the previous research, this paper secondly empirically studies the relationship between equity incentive and corporate performance from three aspects including industry characteristics, company size and the proportion of equity incentive, and further consummated and developed the theory of equity incentive affected by added capital structure, assets operation ability, growth ability, risk level, company properties factors.In this paper, we has selected the relevant data of the Shanghai and Shenzhen stock markets from2006to2012A-share listed company, including operating financial data and equity incentive data as the sample data (521samples), to build linear models for regression analysis.This paper has six chapters. The first part is the introduction of the background, the purpose, the meaning and the methods of the research.The second part is concerned with literature review of equity incentive related theory both at home and abroad,introducing the relationship between equity incentive and company performance of Shanghai and Shenzhen A shares markets from three aspects respectively.The third part is about the analysis of the implementation of equity incentive in China,including Principal agent theory, Contract theory, Human capital theory and Motivation-Hygiene theory.The fourth part contains the analysis of the implementation of equity incentive, briefly elaborate the implementation stage, industrial distribution and subject choices of equity incentive. The fifth part states empirical analysis of the relationship of equity incentive and corporate performance from three point of view. Finally, the conclusion and expectation of this subject is in the sixth part, and gives some recommendations of the future.It can be inferred from the empirical results that:In general, there is a positive linear relationship between management equity incentive and corporate performance of Chinese listed companies, it can be observed the ascension of the company’s performance after the implementation of equity incentive; Equity incentive effect has industry differences, but the distinction among industries does not get significant results; Perspectively based on firm size, the company’s size and performance of the company have a significant positive correlation,once a company has a bigger size, the performance will be better;Different shareholding ratio can lead different consequence. Management ownership and corporate performance have significantly positive correlation in greater than25%interval, the higher percentage management hold equity, the better on the implementation of equity incentive effect.The innovation of this research is that:Firstly, this study is more specialized and targeted by classifying diverse influence factors of equity incentive into certain types in the empirical analysis, because different types of these factors have different influence on corporate performance. Secondly, considering the distinct effect on company performance caused by the different shareholding proportion of management,5%and25%are chosen as cut-off points. At last, to avoid endogenous problems, this paper introduce lag variable when designing model, so that the exact relationship between equity incentive and company performance can be detected.