Analysis On The Equity Incentive Programs For The Listed Companies In China

The modern corporate system advocates the separation of ownership and management. As a result, there comes the agency relationship. The commissioned managers are responsible for the enterprises. However, because of the different purpose between owners and the commissioned managers, conflicts will be happened, especially when they pursue maximum benefits for themselves. When the power of management is growing, there will be some problem in the agency relationship. Recently, the western developed countries have tried to carry out equity incentive programs to solve the conflicts between owners and managers, and this program is believed as an effective incentive mechanism. In this program the professional managers are given the right of residual claim, so, their personal interests are taken into consideration, when they take part in the corporate management. From this way, the costs of agency system are reduced.The equity incentive programs in China develop later. The equity division reform was begun at 2005. After that, the non-tradable shares were allowed to circulate by the authority, and the equity incentive programs became more and more popular in Chinese listed companies. Meanwhile, Chinese scholars try to study the availability of the equity incentive programs.This thesis tries to review the former studies and build a analysis structure from two aspects, which are overall implementation situation and the structure of equity incentive contracts. In the empirical study, I choose listed corporate samples from stock markets of Shanghai and Shenzhen during the period 2010-2013, this is a random sampling process. I implement a two-step experiment approach to test the effects of equity incentive program. At the first step, I use the SPSS software to get the T-value of the sample and confirm whether the program is effective or not.At the second step, I introduce the Multiple-Regression Analysis approach to study the effect of different factors in the equity incentive program. At the last, I carry out a case study which is the LU ZHOU LAO JIAO co., ltd to analyze its equity incentive program, and compare this corporate which the ones who don’t implement the equity incentive program. The case study is used as a test for the conclusions from the empirical studies.