Study On The Incentive Effect Of Performance Compensation Commitment On Firm Performance Through Private Placement

Performance compensation has been risen to a legal issue after the introduction of <Measure for the Administration of Material Asset Reorganization of listed companies>,which standardize performance compensation procedures.However,21 th Century report holds a different opinion that they think the measurement has made performance compensation even casual.Under such circumstance,what cause performance compensation become a mere formality which fail to protect minority shareholders' interest?To answer the question,this paper studies performance compensation commitment's incentive effect on enterprise value while purchasing assets through private placement based on theoretical analysis method.This paper also take majority shareholders' participation,different property rights nature into consideration to study performance compensation's function effect and investigate performance compensation commitment's regulating factors.Then,discuss different compensation method's effect on firm value as well as whether performance compensation commitment has realized its function to protect minority shareholders' interest and prevent firm value from reducing.This paper firstly summarized domestic and abroad scholars' studies about performance compensation commitment.Secondly,suggest relative hypothesis based on the analysis of performance compensation commitment's function effect.Thirdly,constructing model and use regression analysis method to study the relationship between performance compensation commitment and firm value.The brief findings are as follow:(1)Performance compensation commitment has incentive effect on firm value through Private placement since there is a positive correlation between them;(2)Compared with cash compensation commitment,stock compensation commitment has a stronger positive effect on firm value.(3)When not realizing former agreed target,performance compensation commitment failed to prevent firm value from decreasing which also fail to protect minority shareholders' interest.(4)There is a positive correlation between performance compensation commitment and costratio while there is a negative correlation between performance compensation commitment and operating cost ratio through private placement,therefore firm value can be increased through improving costratio as well as reducing cost ratio;(5)Majority shareholders' participation has a negative effect on performance compensation commitment's function react.(6)Property right nature of state owned enterprises has a positive effect on performance compensation commitment's function react.Based on the study result,this paper come out with some suggestions about improving performance compensation commitment function react and shareholder protection system which aimed at improving legal construction,maintaining capital market's order as well as protecting minority shareholders' interesting.