The Mechanism Of Equity Incentive And Tax Planning Benefit Share Research

The principal-agent problem caused by information asymmetries has been under the spotlight for a long time. Tax planning has encountered the same problem. Whether it is effective for Chinese listed companies to carry out equity incentive? What’s the motivation of avoiding tax for the executives? Can the implement of equity incentive strengthen the power of tax planning? These problems are urgent to be solved to guide Chinese microeonomy for better development.In this paper, we adopt the date of a-share listed companies from 2009 to 2012 to establish the multiple regression model and statistical model. By controlling the effect of non-taxing behavior, we study the whole process of management’s equity incentive based on stimulation(equity incentive), behavior(avoiding tax), results(performance promotion) and feedback(stock grants) to inquire into the action pathway of equity incentive and find a medium by which tax planning revenue are shared.The study finds that, the implement of equity incentive can promote corporate performance. Tax burden will be alleviated as a result of the strengthened power of equity incentive, which enhances the corporate performance as well. However, the change of tax burden caused by non equity incentive factors does not have remarkable impact on the enhancement of the company.Our research shows that revenue sharing mechanism of avoiding tax can be established under reasonable equity incentive system. With tax planning encouraged, managements are capable of forming a win-win situation where they can improve corporate performance.