Institution Environment, Equity Incentive And Corporate Performance

Equity incentive is the practice and theory of a special focus on the importantinternal governance structure, the last major study of the implementation of equityincentive effect, this paper based on the study on the effect of equity incentives, alsostudied the usefulness of equity incentives in the course of implementation, externalcorporate governance environment that is listed on the geographical location of theequity incentive and corporate performance has strengthened the role of thecorrelation，usefulness of the basic conditions for the implementation of theincentive is supporting the external environment.This paper selects listed companies on GEM equity incentive plan for2010-2012to implement the study sample, the use of empirical analysis based on the theoryanalysis, first empirical test of the executives shareholding relationship between theintensity and the equity incentive and corporate performance, then into the systemenvironment variables on the basis (the level of market development, the rule of lawand level of government intervention) of each cross-variable and incentive stockoptions, study of the institution environment for equity incentive usefulness.Empirical studies show: executives shareholding and corporate performancesignificantly and positively correlated, China’s current shareholding proportion ofexecutives and GEM listed companies is generally low, encourage enterprises toincrease the number of shares available to improve business performance; equityincentive and corporate performance also the strength of a positive correlation,enterprises should strengthen in the short-term incentive pay incentives and long-termincentive combine; In the full sample, each institution environment and executivessharehold ratio and cross-term equity incentive intensity was not significant, describeof the three on the effectiveness of equity incentive to play the role of small, for morein-depth study of the institution environment impact on corporate performance, in thispaper, the median market their level of development, the level of government intervention and the rule of law as the basis for empirical regression divided into twosamples, regression results show high degree of market and less governmentintervention areas of the equity incentive and corporate performance has obviouspositive correlation to strengthen the role, the basic level of the rule of law has noeffect on corporate performance.Finally, based on regression analysis conclusion of the empirical, proposed forthe implementation of equity incentive policy recommendations: improve the internalgovernance structure of listed companies and improve the governance of listedcompanies outside environment.