A Study On The Market Effect Of Equity Incentive In Listed Companies

As an effective means to deal with the principal-agent problem in the corporate governance,equity incentive has aroused wide concern at capital market. Since70’s in last century, withthe development of new economy and the capital market, the equity incentive has gained greatsuccess in western developed countries. In2005, China revised "company law" to clear the legalobstacles in our implementation of equity incentive, and then a large number of the A-share listedcompanies launched equity incentive which represents the characteristic with capital marketvolatility. In China’s GEM (Growth Enterprise Market) of listing corporation, in order to makethe management and shareholders, company’s long-term interests, and retain, attract talent, havelaunched equity incentive. In the secondary market of GEM, how investors react to theequity incentive plans? How about the market effect of equity incentive plans?This paper’s samples will be selected from the listing corporations which have launchedequity incentive plans during the year2010to2013. We choose the GEM index as the benchmarkindex, and make an empirical analysis on the market effect of equity incentive plan announcement.The full text is divided into five chapters.The first chapter is the introduction, which mainly introduces the research background andsignificance, reviews and summarizes the relevant research literature review, researchcontents, the framework and innovation.The second chapter introduces the concept and theoretical basis, mainly introduces themeaning, purpose, the main equity incentive way, implementation process and other content,reviews the theoretical basis of equity incentive and China’s equity incentive laws, regulations.The third chapter is the methodology part, combined with the equity incentive planannouncement, introduces the definition and calculation of the event study process and rate ofreturn, and put forward the research hypothesis.The fourth chapter is the empirical part. Firstly, it describes the present situation of equityincentive in China. Secondly, basing on the situation of the GEM equity incentive, we make theempirical analysis of the market effect. Thirdly, we analysis the different market effects ofdifferent aspects of equity incentive.The fifth chapter summarizes the market effect of the announcement, and puts forward someuseful policy suggestions from two aspects of establishing securities market and standardizethe effective corporate governance structure.