Study On Relation Between Management Equity Incentive And Operating Performance For Internet Corporations

With the development of modern corporate system, the enterprise ownership and management right separate each other for the listed company, so the principal-agent problem arises. Goals of the owners and managers are not consistent. Enterprise owners’ goal is to hope management to work hard to improve the enterprise operating performance while enterprise managements are often against shareholders’ willingness because of ‘moral hazard’ and ‘adverse selection’. Enterprises implement equity incentive on management to unify the target of the owners and managers and continuously improve enterprise operating performance. The internet-based economy is prosperous. There exists principal-agent problem in internet companies. In theory, this paper argues that Internet companies need to implement equity incentive on the management and the implementation of equity incentive on management can improve the operating performance for internet companies.In order to verify the above viewpoint, this paper mainly uses empirical research methods to study relation between management equity incentive and the operating performance for internet companies. Firstly, this paper introduces the research background and expounds literature review and related theoretical basis. Then,this paper puts forward seven assumptions, introduces data sources and sample selection, sets explained variables and explaining variables and controlling variables, establishes regression model, uses listed 100 internet companies from 2009 to 2013 as research samples, and puts relevant variables into descriptive statistics analysis, correlation analysis and multiple linear regression analysis. The empirical results show rate of management equity incentive are positively related to return on equity for internet companies; Five control variables has their contribution to the positive relevance of return on equity and rate of management equity incentive and these five controlling variables are the sustainable growth rate, the number of management, management average age, solvency indicator and ownership concentration indicator; the operating cycle has its contribution to the negative relevance of return on equity and rate of management equity incentive. Finally, this paper gives corresponding countermeasures and suggestions respectively.