Research On The Impact Of Firm Performance Made By The Equity Incentive Of Listed Company

Equity incentive, as a kind of effective long-term incentive, aims to link managers’ personal interests and the overall organization’s interests through stock right. On the one hand, it turns aside short-term actions by managers and reduces cost; on the other hand, it will accomplish overall value-optimization with higher operating efficiency. Equity incentive has been widely applied into practice in western countries and has showed great superiority in many fields including resolving the principal-agent problem, improving operation performance and attracting great employees. Nevertheless, it is relatively new in China due to special nature and correspondingly, it has not developed maturely or worked very well in implementation. Therefore, it is not hard to understand that equity incentive has been a popular academic opportunity and a tough challenge as well standing on different academic researches. This paper is going to research the impact on corporate performance by implementing equity incentive in listed companies to serve them better.This paper starts with introducing concepts and theory system of equity incentive and corporate performance. Then it organizes the developing history of equity incentive in Chinese listed companies, along with conclusion of current situation and existing problems. Particularly, it selects the group of A-Share listed companies, announced equity incentive in 2012 and implemented between 2012 and 2014, as the research sample. By building the multivariate linear model with equity incentive and corporate performance, this paper deeply analyzes how equity incentive impact corporate performance and the relationship between each other. In the meanwhile, this paper also conducts independent T-test to samples with different incentive scenarios and periods of validity and concludes influences of these two factors. At the end of this paper, it proposes a couple suggestions to improve equity incentive development based on combination of theory and empirical study.