Research On Contract Design Of Equity Incentive In Listed Companies

It has been a big problem for many listed companies to build a rational and effective long-term incentive mechanism, before equity incentive becomes a mainstream approach of corporate governance. This is especially true for two categories of listed companies:one is state-owned companies; another is companies in competitive industries.Since2006, regulators gradually establish and perfect the institutional environment of equity incentive, resulting in its widely application. In order to maximize the positive effects of equity incentive, we should attach great significance to the plan or contract. Thus, the structure and design of incentive contracts has become the focus of research and attention of Chinese scholars.The majority of existing research mainly focuses on empirical analysis rather than case analysis, which forms the core chapter of this paper. After presenting a general principle of incentive contract design, this paper chooses Shanghai Jahwa as the research object. The study finds that equity incentive does play a positive role in improving corporate governance. Meanwhile, this effect has been weakened by insufficient constraints, which needs more attention from all parties concerned.This paper is divided into six parts:Chapter1introduces research background and significance first, then main ideas and framework.Chapter2reviews recent literatures of studies on the structure of equity incentive contract by domestic researchers.Chapter3and Chapter4discuss supporting theories under equity incentive and analyze factors that influence it. Based on the discussion and analysis before, the author puts forward some framework principles of incentive design.Chapter5is the main part of the whole analysis, focusing on intrinsic motivators and restrictive factors. It takes many aspects into consideration, including company competitiveness, governance structure, contract elements and human capital.Chapter6is the conclusion and outlook of future studies.Main contributions of this paper:Firstly, this paper makes an attempt, explicitly proposing several macroscopic and framework principles of equity incentive contract design. Secondly, this paper provides a longitudinal comparison sample for the effects of the nature of enterprise, which is different from previous studies.Main restrictions of this paper:Lack of quantitative analysis. Research depth is restricted by limited information disclosure and data available. The inherent limitation of case analysis also affects the conclusion’s range of application.