The Influence Of The Equity Incentive Of The Listed Companies In China On The Executives' Behavior Of Financial Decision-Making

As a long-term incentives system,equity incentive which is an effective way to ease the principal-agent problem,can make the interests of executives and shareholders of the listed companies to be unified.Equity incentive not only plays a decisive role in the management,but also is successfully used in our country.Equity incentive is widely studied by domestic and foreign scholars,both theory and practice have proved that equity incentive has an important influence on the performance of the listed companies.But these studies are often linked to equity incentive and the performance of the listed companies directly,and neglect the fact that equity incentive of the listed companies will first effect on the executives' behavior of financial decision-making and then improve the performance of the listed companies,so it is necessary to make clear the relationship between the equity incentive and the executives' behavior of financial decision-making,and it's also meaningful.This paper mainly studies the relationship between the equity incentive in China and the executives' behavior of financial decision-making,and respectively states the influence of the equity incentive on the financing behavior,investment behavior and the dividend payment behavior.Firstly,we review the domestic and foreign studies related to equity incentive and executives' behavior of financial decision-making,and describe the significance and background of this study.Secondly,we define the related concepts,and put forward the relevant theory of the equity incentive.Thirdly,based on the analysis of the current situation of equity incentive in China's listed companies and the mechanism between the executives' behavior of financial decision-making and equity incentive,we summarize the positive influence and negative influence of the equity incentive on executives' financial decision-making behavior.Then,as the case of Shanghai Jahwa,we analyze the improvement and motivation of Jahwa's equity incentives,and discuss the effect of equity incentive of Shanghai Jahwa on executives' behavior of financial decision-making in detail.Based on the above analysis,we come to the following conclusions: first,Equity incentive has both positive influence and negative effect on the behavior of executives;second,the positive effects of the equity incentive on the behavior of executives' financial decision-making are based on some reasonable conditions,such as the scientific examination index.What's more,the negative effects can be alleviated by changing corporate governance structure and so on.Finally,we put forward some suggestions about how to increase the positive effects and decrease the negative effects of the equity incentive on the executives' behavior of financial decision-making.These suggestions will provide the reference and experience for other listed companies which will try to the equity incentive plan.