The Research On Implement Effects Of Equity Incentive In Chinese Listed Company

As a long-term incentive measures,the mechanism of equity incentives is that granting executive stock,then incentiving executive to work hard as the owner of the company’s residual income and realize the goal of shareholder value maximization. The completion of the split-share structure reform and the improvement of the relevant supporting policies clear the barriers in policies for the implementation of equity incentive. China securities regulatory commission promulgated Listed Companies Equity Incentive Management Approach, that marked the beginning of really Chinese equity incentive practice. How is the effect of China’s listed company equity incentive? The equity incentive mode selection, nature of equity and corporate internal governance structure, how these factors influence the equity incentive effect? This article can provide reference for applicability of the equity incentive and the design of equity incentive plan.Based on the theory of optimal contract and the theory of executive power, this article analyzed the mechanism of equity incentive. With the data of 2006~2014, this paper built a comprehensive accounting performance index F measuring company performance in the product market using the factor analysis method firstly, then analyzed the effect of listed company equity incentive by the performance in the product market and capital market using multiple linear regression model.Finally dividing sample data to group according to the mode of equity incentive, equity nature and internal governance structure, study the influence of these factors on the equity incentive effect.Several conclusions are achieved:(1) There was a positive correlation between the equity incentive level and the performance of capital market, but the equity incentive is not related with operating performance in products market.(2) The mode of equity incentive have an impact on the implementation effect of equity incentive. Comparing to stock options, the positive correlation between restricted stock and the company’s value is stronger.(3) The nature of equity have an impact on the implementation effect of equity incentive. The effect of equity incentive in non-state-owned enterprises is better than the state-owned enterprise and the correlation of equity incentive and firm performance is stronger.The deviation of empirical results and theoretical analysis shows that the following questions:(1) The vesting conditions of equity incentiveassociated with the company’s performance in product market profit, and the realization of the executive’s individual interests is associated with the performance of the capital market share price. The imperfect of internal and external rules and regulations impact the effectiveness of equity incentive.(2) The equity incentive plan design is unreasonable, the assessment standard of executives’ performance is low, equity incentive become to the tool of self-pay.(3) The weakness of the Chinese capital market weakens the effectiveness of equity incentive. Under the drive of interests, the executives affect the share price by self-interest behavior such as information disclosure.