The Study On The Implementation Of Equity Incentives Of State-owned Enterprises In China

In 2015, The Central Committee of the Communist Party of China and the State Council jointly issued a framework document on "guidance of deepening the reform of state-owned enterprises". Since then a new round of the reform of state-owned enterprises has formally started. The reform of marketization can not survive without the application of market-based incentives. With the deepening of the reform, the environment that state-owned enterprises face will be more and more market-oriented. Whether or not the use of equity incentives can motivate people in such environment will have great impact on the reform of state-owned enterprises. Equity incentives have been used in the field of enterprise incentives for many years, and have been gradually introduced in the state-owned enterprises. However, there are still many unsolved problems on the implementation of Equity incentives and various factors are still restricting the expected effect.This article used the comparison method and empirical analysis method to test the performance of state-owned enterprises before and after implementing the Equity incentives; and test the performance of state-owned enterprises with and without implementing the Equity incentives. It also found out different implementing effect among different state-owned enterprises.The empirical study showed that the performance of state-owned enterprises which have implemented the Equity incentives was better than those that have not. It proved that the implementation of Equity incentives will significantly improve corporate performance. In addition, after the implementation of the Equity incentives, the Rate of Return on Common Stockholders' Equity, Return on Assets and Tobin Q of state-owned enterprises have been obviously improved, but this is not the case in central enterprises. It proved that Equity incentives has better effect on local state-owned than on central enterprises. However, equity incentives have not been able to show significant correlation with the performance of local state-owned enterprises, which showed that there are still problems that need to be considered in the implementation process, such as the object and quantity of incentives. In addition, the study showed significant positive correlation between executive compensation and corporate performance.At the end of the article, the author gave suggestions according to the current situation of the implementation of Equity incentives on the state-owned enterprises and the related data on corporate performance.