The Empirical Study On The Effects Of The Equity Incentives Of Listed Companies In A-Stock From Shanghai&Shenzhen Securities Markets

Equity incentive is able to combine incentive and constraint mechanism together. Compared with other short-term incentive policy such as bonus and allowance, equity incentive is more effective and lasting in reducing the agency cost and enhancing management efficiency. Since Vanke first implemented equity incentive system in1993, China has been engaged in active exploration. Due to stock liquidity problems, the development of equity incentive was relatively backward and slow before the split share structure reform. China’s Securities Regulatory Commission promulgated equity incentive management measures of listed company in2006January, thus promoting the development of equity incentive to a new level. The true meaning of the implementation of equity incentive helps to achieve a win-win situation between shareholders and management and to enhance the performance of the company. Because of the time and different research methods, domestic and foreign scholars have not reached a consensus on the effect of equity incentive system in practice. In the new institutional background, the study on the effect of the implementation of equity incentive is more valuable and practical.This paper first analyzes the basic concept of equity incentive from a theoretical point of view, and then summarizes the implementation and utilization of equity incentive in listed company. This article focuses on empirical study about the effect of the implementation of equity incentive and selects listed companies of the Shanghai and Shenzhen A shares which have implemented equity incentive in2012as the study sample. In order to study the relationship between equity incentive and corporate performance, the paper constructs a non-linear model by using earnings per share as the explained variable to measure the performance of the company and choosing management shareholding ratio as the explanatory variable to measure the level of equity incentive. Combined with the actual situation, the paper selects management compensation, the proportion of independent directors, Large Shareholder Expropriation, the capital structure, the scale of the company and growth as six control variables to control the company characteristics and corporate governance structure. Finally, based on the analysis of research results, the paper puts forward some policy suggestions.The main content of this paper is divided into the following several parts. The first part is introduction, which introduces the research background and significance and then describes the current situation of related research and research method of this paper. Finally, the introduction points out the innovation and deficiency. The second part introduces the basic meaning and theoretical basis of equity incentive and then comments on domestic and abroad research of equity incentive. The third part first introduces background of the implementation of the equity incentive system and then analyzes the current situation of the equity incentive system. The fourth part is the empirical study on the effect of the implementation of equity incentive. The fourth part tries to figure out the influence of equity incentive system on the promotion of corporate performance and how huge the influence is. The fifth part serves as the conclusion. The fifth part first summarizes the previous research and then puts forward relevant suggestions as well as attention-getting problems of the implementation of equity incentive system. At last, the perspective future of research on equity incentive system is prospected.The paper draws the following conclusions through empirical research. First, after constructing the regression model and analyzing the results, it is found that the performance of the company and the stock incentive level is significantly nonlinear correlation. Second, maximum value of company performance is0.59while minimum is0.2. Corporate performance, between0.2and0.59, improves with the development of equity incentive level. On the contrary, outside the interval, corporate performance declines with the development of equity incentive level. Third, the empirical results of control variables are as follows. The higher the asset liability ratio is, the worse the effect of implementation of equity incentive is; the bigger company scale is, the better the effect of implementation of equity incentive is; the higher the company growth is, the better the effect of implementation of equity incentive is. These research conclusions can provide the implementation of equity incentive system with empirical data.