Based Incentive Management Equity Business Growing And Maturity

With the separation of ownership and management of modern enterprises, in order to reduce the short-term behavior of managers and help enterprises’ managers pay more attention to sustainable development of enterprises, the management equity incentive emerged as a long-term incentive, which may better combine the interests of the shareholders, corporate managers with the individual interests. Management equity incentive makes the management of enterprises becomes a shareholder, and management can involve in the daily management of the enterprise and also share profits. Therefore, the use of management equity incentive may be helped to solve the principal-agent problem under the separation of business and ownership. What’s more, it may play an active role in improving the internal governance structure and the management efficiency of enterprise, encouraging management to keep efforts for long-term development, reducing agency costs and so on.In recent years, most of listed companies in China tend to regard equity incentive as a long-term incentive method. They want to improve the company’s performance through the implementation of the management equity incentive. At the same time, many scholars believe that enterprises have the life cycle. The business development strategy, accounting features and principal-agent problem between shareholders and managers vary from different life cycles. Therefore, the implementation of the equity incentive program can have different impact on company in the different stages of the life cycle. On the basis of the enterprise life cycle theory, this paper explores the various equity incentive programs in the different stages of the life cycle with comparative analysis method of the case. Further more, this paper analyzes the effects of short-term stock price and long-term operating performance of equity incentive used by quantitative analysis.Firstly, based on the sorting of enterprise life cycle and equity incentive effect theory, this paper defines the stages of the life cycle by used the cash flow classification method. Secondly, it analyzes equity incentive program in the growth and maturity of the enterprises from equity incentive model, size and validity arrangements. Finally, it uses event study to investigate the short-term stock price effects and financial indicators method to investigate the long-term operating performance. The research shows that listed companies in different stages of the life cycle have different equity incentive programs based on their actual development. What’s more, it also shows that short-term stock price effects and long-term operating performance effects of growing enterprises are stronger than mature enterprises.