An Empirical Study On The Relationship Of China's Listed Company Between Equity Incentive And Corporate Performance

In the modern enterprise,the separation of ownership and management has become its significant characteristic,which will lead to a series of principal-agent problems.The business owners go after maximizing shareholder interests,and the managers pursue their own benefits maximization.Because their profit goals are inconsistent,due to the information asymmetry and the incomplete contract,there will be some conflicts between them.The managers may use the money,power and position provided by the owners for their own benefit,but the owners can't supervise the managers' all activities at any time.For this situation,as a kind of long-term incentive mechanism,equity incentive play an important role in reducing principal-agent cost,attracting and retaining talents,restricting managers decision-making behavior and improving corporate performance.However,an unreasonable equity incentive plan will bring negative influence on corporate performance,each element of the plan can produce different incentive effects.So it is necessary to probe into the specific quantitative relationship between equity incentive and corporate performance and incentive effects which brought by different elements of the plan.What's more,there is vital significance for promoting the company's long-term development.This paper selects 128 companies which implement the equity incentive plan from the listed companies in 2013 as the research sample data,to compare the various performance between enterprises from the horizontal and vertical aspects by respectively using independent sample T test and paired sample T test.The lateral comparison results show that there was no significant difference between the sample companies which did't lauch the equity incentive plan and the unimplemented control group.But compared with the unimplemented group,the sample group's performance has significant improvement.The longitudinal comparison results show that the performance of the sample group with the implementation of equity incentive has markedly improved than before.Above all,the implementation of equity incentive has a promoting effect to corporate performance.Then comparing the relationship of the company's incentive amount,exercise price,incentive mode and corporate performance by empirical analysis,draw the following conclusions: Firstly,from the overall sample,the incentive ratio makes no difference to corporate performance.But after dividing the incentive ratio into three intervals,there will be some differences.Between 0 and 1.5%,the incentive ratio is not significantly positive correlation with corporate performance;at the interval of [1.5%,3.3%],they has a significant positive correlation;then in the range from 3.3% to 10%,there was no linear correlation between them.According to this article's sample group,the optimal interval for incentive ratio is [1.5%,3.3%].Secondly,the exercise price has significantly positive correlation with corporate performance.Thirdly,in the two main modes,the stock option is superior to the restricted stock in improving performance,but the difference is insignificant.In view of the above results,this paper provides the relevant advice such as improving the relevant laws,professionalizing manager market,strengthening the capital market efficiency,perfecting the information disclosure mechanism,establishing reasonable performance evaluation system,perfecting the company governance structure and the design of equity incentive plan.The article is intended to provide suggestions of making equity incentive plan and instruct implement equity incentive plan better,avoiding its bad impact on company performance,making it have a positive effect that lead the company to healthy and sustainable development.