Equity Incentive Effect Research In China

Equity incentive is a major innovation of incentive mechanism, which has a long-term effect. In Western countries, the effect of equity incentive has been confirmed. Compared with other countries, Chinese equity incentive has a later start. After share structure separating reform, more and more listed companies launch equity incentive plan in China. In Western countries, the equity incentive mechanism is more mature and have a better effect. In our country, does the equity incentive play out its function? Will the incentive have different effect on Motherboard, the SME board, the GEM listed companies? What kind of feasible suggestions can provide to regulatory department for improving the system and a better regulatory environment? What kind of creative inspiration can make to improve the design and governance structure of the company’s equity incentive program? The problems above are the motivations and key issues of this paper research.This paper study the equity incentive effect from the comparative analysis between the three main board in China. The results are not satisfactory in the equity incentive effect study, but the main board is better than the SME board, SME board better than the GEM. From the Chapter 6 of this paper, we learn that the different equity incentive factors will have different effect on the three board. The empirical results show that: ① Between the motherboard and the SME board, equity incentive effects of listed companies are positively correlated with equity incentive proportion, but not significantly; For GEM, the incentive effects of listed companies have a negative correlation with equity incentive degree, not significantly. ② And for three board, the incentive validity and the performance of listed companies show no significant negative correlation. ③ In motherboard and the SME board, the performance of equity incentive is not as good as other incentive model which is not significant too. But this will not happen in GEM, the performance of equity incentive will have significant superiority. ④ In motherboard, equity incentive effect have a little positive correlation with company size. But in the SME Board and GEM, it is a significant positive correlation. ⑤ For the three boards, the assets liability ratio and equity incentive effects have significant negative correlation. ⑥ The total share of the first five largest shareholders in the boards has positive correlation with plate equity incentive effect but not significant statistically. Finally, considering the status of implementation of incentive stock options and features, it provided some feasible policy recommendations in terms of corporate governance structure, market conditions, system performance respectively. According to the empirical results, it provides some references in the development of the equity incentive plan for the three sections listed companies.