Research On The Relationship Between The Equity Incentive Contract Elements And Enterprise Performance Of GEM Listed Companies

The advent of knowledge economy era promoted rapid development of the high-growth,high-tech companies.GEM which is low access,high operation,strict disclosure rise,especially the Nasdaq stock market.Compared with the main board market,GEM created a good financing platform and the effective way of capital operation for the " three high and one small”(high growth,high tech,high risk,small scale)company.China's GEM listed on the Shenzhen stock exchange in October 2009.GEM attracted 540 companies to join by the end of September 2016.It has become an independent innovation incubator and industrial park.But Companies that contains great potential for growth in the GEM face high risk.They will eliminate from the GEM competition if any carelessness.The largest driving force for the gem listed companies growth is R & D capability of key technical staffs and outstanding management concept of top managements.How to attract and retain these talents is the key to the survival and development of the company.Equity incentive has been widely used in western countries as an effective way to solve principal-agent problems and encourage talents.China introduced the motivational methods in the 1990 s.Equity incentive make equity as the target.Executives and core technical personnel have the equity,so they can participate in company decision-making and profit sharing.Key employees who are company owner and shareholder have the same goal and interest so they move forward together because of the incentive method that increase the employees' work efficiency and enthusiasm.In this paper,the relevant literatures about equity incentive were summarized and generalized.Most scholars study the incentive plan as a whole,but the discussion of its internal contract elements is not deep.This article will attempt to make up for this deficiency and blank and study from the perspective of the gem,which is the innovation of the article.Based on the introduction of related concepts and theories,this paper analyzes the present situation of the GEM listed companies' incentive plant.It founds some questions: the proportion of incentive is generally low,the period of validity is short,the exercise conditions are single and the mode is simple.In order to further study relationship between the equity Incentive contract elements and enterprise performance,this article selects 181 companies as samples and uses the empirical method for analysis.First of all,in order to avoid a single index respectively,this article selects the 14 financial indicators and use factor analysis to calculate composite scores.The results showthat the performance of the GEM companies' equity incentive is general.Then,this article use the independent sample T-test analysis plans to analysis of the effect of equity incentive and found corporate performance improve a slightly but not significant.Finally,it explores the relationship between the contract elements include proportion of incentive,the period of validity,exercise conditions and the corporate performance through the regression method.What's more,it compares the effect of two main modes.It conclusions that motivation proportion and performance is a weak positive correlation;there was no significant relationship between validity and performance;exercise condition number is more,corporate performance is better;the incentive effect of restricted stock is better than stock option.On the above empirical results,this paper puts forward the suggestion: equity incentive contract elements design aspect,company determine reasonably proportion of incentive,the period of validity and incentive mode.The conditions of exercise should be diversified.External environment aspect,it is necessary to cultivate a good market environment,optimize the structure of corporate governance,strengthen the supervision of the management and internal control,improve the relevant laws and regulations.