Research On The Influence Of Equity Incentive On The Stock Price Crash Risk

The stock price crash is an extreme manifestation of asymmetric volatility of the stock market,shown as the stock price or market index fell sharply in a short time.Once the stock market faces the risk of collapse will bring serious consequences,such as the stock market crash of 1987,the Asian financial crisis,the global financial crisis and etc,not only could damage the interests of investors,the stableness of stock market,but also shake the confidence of capital market.The separation of ownership and management rights causes the conflict of interest between the principal and the agent.With the company's development and expansion of the economy,the deepening conflict of interest endangers the long-term development of the company.Equity incentive is designed to connect the interests of the principal and the agent in the form of shares or options,making the agent returns,enterprise development and stock market performance linked,thus to motivate management and to eliminate the agency cost.However,the empirical evidence points to a contradictory result.The introduction of equity incentive will bring what kind of impacts on stock price crash risk?And what role will ownership nature play in this relationship?As a growing emerging economic entity,China's stock market is overall healthy but at this stage facing great challenges,such as immature investors,imperfect legal protection and accumulating financial risk problem,etc.Thus compared with the developed countries,China's stock market now is at higher risk of crash.So the special institutional background of China provides ideal samples for empirical study of crash,meanwhile the related research has important theoretical and practical significance for the control of financial risk and the development of capital market.Based on the Behavioral Finance Theory,the Principal Agent Theory and Contract Theory,the dissertation adopts financial data of listed companies that announced the equity incentive program for the first time in Shanghai and Shenzhen A-share markets from 2006 to 2014 for empirical research.The dissertation empirically tests the relationship between equity incentive and stock price crash risk,further examines the role that ownership nature playing in.Findings are above:(1)equity incentive is positively correlated with stock price crash risk;(2)the grouping regression results show that state-owned enterprises will enhance the positive correlation between equity incentive and crash risk.This dissertation is composed of five chapters.The first chapter is the introduction,which introducing the research background,methods,ideas,innovation and related domestic and international literature review about the influencing factors of crash risk,equity incentive and ownership nature.The second chapter is the definition and theoretical basis of equity incentive and stock price crash risk,the theories are the Behavioral Finance Theory,the Principal Agent Theory and Contract Theory.The third chapter is the situation analysis and the research hypothesis based on the analysis of institutional background and the status.The fourth chapter is empirical research,including define research variables,construct the research model,descriptive statistics and correlation analysis,and multiple regression analysis.In regression analysis,we firstly conduct the full sample,then the samples are divided into two groups of state owned enterprises and private enterprises according to the difference of ownership nature.The fifth chapter is the conclusion,suggestions and research prospect.The conclusion of the study is not only to expand the empirical research of stock price crash risk,but also helps to correctly locate and guide the practice of equity incentive in our country.In addition,it also provides a useful reference for the smooth development of China's capital market.