Research On The Relationship Between Stock Incentive And Performance Of Listed Companies On

China preparing for a 10-year GEM open board since October 23, 2009, has the potential for many high-tech SMEs to promote a virtuous cycle of venture capital, to adapt our economic transformation, to enrich multi-level capital market. Equity incentive, a long-term incentive has been more popular in recent years. It would have one stake in the company to grant the necessary incentive target, combining interests and the overall interests of the company together, sharing profit and risk. It would not only reduce agency costs but also promote the improvement of corporate value. China after the introduction of tradable share reform is completed and the relevant laws and regulations in 2005, the company on the board introduced a large number of equity incentive plans, incentive object to executive majority. The companies listed on GEM develop technology as the core feature and require companies to attract and retain key employees. Therefore the company would take incentive measures for the core technology and operational staff necessarily. Equity incentive can be on the GEM business of listing Corporation and the survival and development of a future important implications for managers and key technical personnel with the company and the interests tied together, inspiring them to pay attention to the long-term development of the company, and obtaining the benefits of growth for the company, So as to promote the whole GEM health, steadily advance. Full circulation of GEM and emphasize the disclosure of information to make it more suitable than the main board of the implementation of equity incentive system. Fact is proved that the equity incentive in the GEM is quite popular, before the end of 2013, more than 40% companies listed in GEM raised equity incentive draft. However, as soon after the establishment of the GEM, the capital market and related laws and regulations are not mature, so it is texted to decide whether equity incentives can play the desired effect or not. Because of the short time span, there is little GEM equity incentive documents and research, so it failed to provide comprehensive guidance to the companies listed in GEM which use equity incentives. Empirical studies of equity incentive on board listing Corporation have used more profit index to describe the company’s performance; do not accord with the development situation of companies listed on GEM. Therefore, we cannot copy the research method to describe the implementation of equity incentive of the GEM.In such a case, this paper sorted out the equity incentive mode, the industry distribution, the exercise conditions, incentive amount and incentive objects, analyzing the situation of equity incentive in companies listed on GEM. Then from the core competitiveness of companies listed on GEM, selected the evaluation index which can fully describe the company comprehensive and take empirical research on the relationship between equity incentive and companies performance listed on GEM. Then get the following conclusion:Nowadays, companies listed on China’s GEM use only the stock options and restricted stock two kinds of stock incentive model; companies in the implementation of equity incentive concentrated in manufacturing and information technology services industry; the performance evaluation is the growth rate of net profit and net assets yield rate; incentive share is generally not high; the incentive objects to the core technology and business personnel; the implementation of equity incentive in enhancing the overall company performance, but the effect is not obvious; higher the proportion of the total shares of incentive shares is, more significant the incentive effect is; restricted stock incentive model is better than the effect of stock options.In general, the equity incentive can improve the company’s operating performance, but not fully play the role of it. This is because of the existence of some problems. For example: the effectiveness of GEM is not high, internal corporate governance structure is not reasonable and design of equity incentive plan is not appropriate and so on. Therefore, we should improve the efficiency of capital market, laws and regulations. Strengthen internal control and design a reasonable set of equity incentive plan, to ensure the equity incentive can be implemented effectively.