The Study Of How Equity Incentive Of Listed Companies Affects The Market Value Management Performance

In the background of full circulation, companies are paying increasingly more attention to market value management. We can’t evaluate listed companies’performance simply based on financial indicators, nor market value, but also more comprehensive market value management performance. Market value management includes intrinsic value creation, market value and the match of market value and the intrinsic value. As an important and common measure to manage market value, equity incentive has also attracted the attention of the listed companies. Therefore, this paper studies whether equity incentive can help increase the market value management performance of China’s listed companies.Firstly, the paper summarized the relevant theories of equity incentive and market value management, and deduced the mechanism that equity incentive may affect the market value management performance. Then regression analysis proved that equity incentive has significant effect on the market value management performance. Also the paper used case study method to analyze the effect of equity incentive on the market value management performance of DAHUA. In order to ensure the integrity of the paper, I used descriptive statistical analysis to study the implementation of China’s listed companies’equity incentive from 2005 to 2014. Based on that, the equity incentive programs of DAHUA were analyzed in detail, and I analyzed the market reaction to DAHUA’s twice announcement of equity incentive plans and changes in the market value management performance of DAHUA.The results show that implementation of China’s listed companies’equity incentive can enhance the market value management performance, mainly by enhancing value realization. But the effect on value creation is not obvious, and equity incentive plays a certain role in increasing the intrinsic value of the company. And the implementation of equity incentive weakens the relevancy of the intrinsic value and the company’s market value. Case study results also show that after equity incentive in 2013, market value management performance rankings of DAHUA improve, which significantly enhance the company’s market value, but the operating performance indicators, like ROE, economic added value, do not improve.Therefore, I assume there are some defects in the implementation of equity incentive in China. To solve the problems, this paper presents several suggestions.