Research On The Correlation Between Equity Incentive And Corporate Performance Of The Listed Companies In Chinese GEM Board

Equity incentive plan refers to the equity interest and related incentive given tothe directors, executives and the core technical personnel of the company, aimingto impel the operator to conduct due diligence for the company’s long-term development and solve agency problems in corporate governance. With thereform and development of Chinese capital market, establishment of the multi-levelcapital market system, the equity incentive mechanism has played a very importantrole in the development process of Chinese modern corporation governance. Incontrast to the well function of equity incentive on corporate performance in thewestern countries, the implementation effect of equityincentive in Chinese capital market is still argued by the researchers. Previousresearches and discussions have mostly focused on the motherboard market while fewof the researches have focused on GEM board. With the growing importance of GEMboard in Chinese multi-level capital market system and the particularity of the GEMboard, it is necessary to analyze the correlation relationship between the equityincentive of GEM board and the corporate performance. This research aims to studythe relationship between the equity incentive and corporate performance of the GEMboard listed corporations through the empirical analysis and test. On this basis, thisresearch also aims to further explore the different effects of different equity incentivepatterns on corporate performance in Chinese GEM board market to provide referencefor improvement of Chinese equity incentive institution and capital market system.This research uses the principal component analysis and multi-linear regressionmethod similar to the test about SME board from Zhang Chunhua (2011), to test thecorrelation relationship between equity incentive institution and corporateperformance in Chinese GEM board. Based on the theoretical and empirical testresults, this research tries to provide possible suggestions regarding with the existingproblems in Chinese GEM board equity incentive institution.