The Research Of Effectiveness Of Equity Incentive In IFLYTEK

In the modern enterprises, the ability of the enterprise owner in management has difficulty meeting the rapid development of modern enterprise. With the further expansion of enterprise's management level and the management span, it also promotes the development of the manager market. Meanwhile, the influence of human capital in enterprises has been increasingly highlighted. For the separation of corporate ownership and managerial authority, compared with the corporate owner, the manager owns a better understanding of the status of the company, which resulted the asymmetry of information. At the same time, due to the high cost of comprehensive supervision, implementation will only make the shareholders do more harm than good. Therefore,people have been exploring an effective method to establish effective incentive-restricted mechanism, which serves as the solution to this major problem. And equity incentive mode is one kind of beneficial attempt.Equity incentive namely refers to a kind of incentive system, offering managers a certain economic rights and interests of the company, to make the managers enjoy the benefits of the business and take the risk of the company, as well. Equity incentive for managers will renders them to give more consideration of the interests of the owner in the process of making decisions,in order to avoid the risk of moral hazard and adverse selection, which greatly reduces the agency cost. Equity incentive has different meanings between broad sense and narrow sense. In broad sense, equity incentive refers to the right for the manager to hold or purchase the company's stock in the form. While, in narrow sense, it means that the managers could purchase shares of the company and enjoy the corresponding stock rights in accordance with the contract price.As the country's fundamental, strategic and guiding industry, which related to the national economic and development of society, software and information technology owns the outstanding characteristics of high paced updated original technology, high value-added products, wide application field, strong penetrating ability, low resources consumption, fully used human resources, which plays the an important role of supporter and leader in economic and social development. After high paced initial stage development, the enterprises of software and information technology industry face the severe challenges of increasing pressure of transformation, slowly industrial application, information security, etc. Therefore, how to provide its further development with the source power by using equity incentive has become a new topic for people to consider.This essay is based on the case of IFLYTEK Co., Ltd, which applies the financial index combined with EVA performance indicators based on the company's financial data to the evaluation of the company's financial performance and corporate value. Meanwhile, this essay analyses the implementation of the equity incentive plan and puts forwards related suggestions accordingly. From the theoretical sense, this paper gives a relatively comprehensive evaluation of listed company equity incentive methods in software and information technology services industry.The existing researches tend to pay attention to only one or two major corporate performance indicators. This article makes an analysis of case study of IFLYTEK Co., Ltd company to evaluate the effectiveness of its equity incentive plan from three aspects in financial performance,managers behavior and enterprise value respectively. From a practical sense, this paper provides the enterprise stakeholders with the methods of evaluation on the effectiveness of the company's equity comprehensively based on the company's financial statements and enterprise value.