The Analysis Of Business Partenership Equity Incentive Effect On Company Performance

As a long-term incentive tool,equity incentive is a measure to solve the principal-agency problem caused by the separation of ownership and management,and also an important mechanism in the management of modern company.This mechanism achieves all owners' long-term development goals by letting managers to possess parts of the corporate stock.It alleviates the principal-agency problem and improves company's competitiveness for a long-term sustainable development of the corporation.According to the statistics,among all the 142 A share real-estate stocks,32 real estate companies have implemented equity incentive.11 of them abandoned or interrupted the implementation of equity incentive because of all reasons.The remaining 21 companies also have ups and downs in the implement process.It is difficult to reflect the advantage of equity incentive: senior executives can't exercise power owing to the unstable performance after scheme implement,and even wealth cannot stopping them from leaving.So the incentive pattern needs to be innovated in real estate industry.It's the first time for Vanke to bring in the business partnership into real estate industry.It's also a brave innovation for the current incentive bottleneck situation.So it is necessary and meaningful to study the relationship between company performance and the equity incentive of business partnership.The main research method of this paper is: Literature research and case data analysis.First,it laid a good theory foundation for the study of equity incentive effects on company performance through the analysis and summarize of literature and the full understanding of the main theory and current situation of equity incentive and company performance.Then it introduced the basic situation of Vanke,the reason for implementing business partnership,the content of business partnership,and the meaning of the implementation of business partnership by case study of Vanke.After that,it analysis the business partnership effects on company performance in Vanke in three aspects: Company financial performance,organizational performance,and other effects.This paper is made up by six parts.The first part is the significance and background of the study,which review the literature of equity incentive and build the structure of this paper.The main method of this research is brings out,analysis,and solve problems.First,it brings out the question of what is equity incentive and what effects it has.Then it analysis the reason Vanke implements the business partnership and the financial situation before and afterwards.In the last,it summarizes the enlightenment in the conclusion of equity incentive business partnership implementation to offer the meaning case material in equity incentive for other listed companies in our country.The second part is the definition and basic theory of equity incentive,which is equity incentive theory,principal-agent theory,and human capital theory.The third part introduced basic information of Vanke,the content of equity incentive,the flow and the processing which including the implementation and the situation of power exercise.Then it concluded that the characteristic of business partnership shows in the different level of partnership,the full confidence of all team,and the sharing of success with the partners to attracting and retaining talents.The forth part analysis the change of Vanke's financial performance,organizational performance,and other effects before and after business partnership equity incentive implementation.The analysis of the change in financial performance including four aspects: profitability,growth ability,operating capacity and solvency.The financial index to analysis profitability are: Operating income,net profit,gross margin,operating profit ratio,ROE,ROA,EPS.Revenue growth,net profit growth and total asset growth are used in this paper.The analysis of Organizational Performance comes from employee loyalty,the development space of senior staff,and the corporate structure.Shareholder wealth,management interests,and other aspects also have effects on the analysis.The fifth part drew the following conclusions through the practical analysis of business partnership in Vanke: The implementation of business partnership has important effects on company performance.It will improve the profitability of a listed company after the execution of equity incentive scheme,but has less effect on solvency and development.Although,equity incentive of business partner also be recognized by the market and investors.It needs continuously improvement of the company system according to the problems during the implementation of business partnership to play a better role for company development.The last part of this paper concluded the meaning and problems of the existence of business partnership in Vanke.Hoping it can help us to learn more about the business partnership and to improve it through the case study of Vanke.And hoping it can help more real estate company to make a successful transition in new era.