Research On The Equity Incentive System Of Chinese Listed Company

Nowadays, the property rights and the operating rights of companies areseparated. It causes the conflict of right between the owners and the operators, whichis called principal-agent contradiction. In order to solve this problem, professionalmanagers appear in the market. These managers help the modern knowledge economyto keep developing. In the era of knowledge economy, managers not only need tocontrol the different natural resource, but also need to manage the knowledgeresources. For a listed company, human capital is very important for knowledgeresources. The Equity incentive system was built under the principal-agentcontradiction and the increasing efficiency of human capital. In order to keep themanagers have the same benefits with owners, Equity incentive system is built.Equity incentive system was originated in American. After over sixty developing,Equity incentive system is a reliable system in American now. It gives an effectiveway for listed companies to solve the principal-agent contradiction, enhance thecorporate governance structure and increase the efficiency of human capital.Accompany the developing of the Equity incentive system in China, Chinesegovernment enact some laws of Equity incentive system. These laws give a greatsupport for listed companies to use the Equity incentive system, especially from April,2005. According to the research, from2005to2013, there are442listed companiespublished the plan of Equity incentive system. This data shows that the Equity incentive system is developing well in China. In this paper, author will analysis theEquity incentive system in China based on the developing history of Equity incentivesystem, actual case and the laws of Equity incentive system.The aim of this paper is analysing Equity incentive system of listed company.After studying the developing history and laws of Equity incentive system, basictheory, practice significance and the problems existing in the Equity incentive systemto raise the performance of Equity incentive system in China..This paper includes three parts, introduction, main body and conclusion. Themain body has four chapters.IntroductionIn the introduction part, background, the value of the topic and the necessariesof researching of the Equity incentive system will be discussed. Furthermore, abriefly describe of researching method, researching target and disadvantages of theresearching will be given.Main bodyChapter1, briefly introduce the Equity incentive system which includesdeveloping history of Equity incentive system and its laws analysing such as lawconnotation, law characteristics and the law nature.Chapter2, this chapter presents the method of the Equity incentive system, andalso discusses the advantages and disadvantages of the Equity incentive system inChinese listed companies based on the actual case. Furthermore, this chapter willanalyse the plans of Equity incentive system according to the laws.Chapter3, with discussing the previous chapters to find the problems that existedin the plans of Equity incentive system in Chinese listed companies. There are threemain problems, they are unreasonable plans of Equity incentive system, the laws ofEquity incentive system does not reform and Equity incentive system is not sound inChina.Chapter4, the main purpose of this chapter is to find the better ways to operatethe Equity incentive system. Three ways are presented in this paper to do that. Theyare strength the designing of Equity incentive system plan, reform the company law and securities law of the Equity incentive system and keeping develop the Equityincentive system.