Study On CEO Stock Incentive Effects Of Corporate Governance In High-tech Industriy

In the context of China’s economic system restructuring process, equity incentiveequity incentive system can make managers acquire equity firm and can take activeparticipate in corporate governance as shareholders, it has been favored by manylisted companies. But because of China’s market is complex and the differencesbetween the various sectors, the effect of equity incentive on corporate governancebecomes extremely complicated, so study of equity incentive effect on corporategovernance in different industries will be important.Therefore, this paper takes high-tech industriy as research objective whilecompares it with manufacture industry. For investigating the effect of the CEO stockincentive effects of corporate governance in the high-tech industriy, empericalanalysis was conducted based on panel data of the listed companies of these twoindustries that covers a period range from2006to2012. Based on earningsmanagement and company performance, take CEO stock and share option ratio intotal compensation as incentive strength, and return on assets as companyperformance. At first, the theory and literature on incentive stock options have beensummarized and comb. Secondly, explained the meaning of earnings management,and determine the measurement methods of earnings which been used in this paper.Then, analysis of the relationship between earnings management and corporategovernance in high-tech industries and manufacturing companies, put forward thebasic assumptions and determine the regression model. Finally, compare thedifferences between the two industries equity incentive and corporate governancedetailed, using empirical methods to analyze the relationship between equity incentiveand corporate performance. The results show that, the relationship between CEOshareholdings and options and earnings management is negatively correlation, whenproposed or passed in the equity incentive plan, the negative correlation weakened,especially in high-tech industries, that is to say, equity incentive can take adverseeffects to corporate governance. Therefore, the industry must deepen the internalreform, improve the incentive system, constantly optimize the internal governancestructure and external supervision, take good advantages of equity incentive system toimprove the corporate governance.