A Study On The Announcement Effect And The Influence Factors Of The Private Enterprises' Equity Incentive

Equity incentive plan has developed for more than half century as a kind of remuneration arrangement.Nowadays,most of listed companies in the United States has implemented the plan.From the experience of Western countries,as a long-term incentives to corporate managers,the implementation of equity incentive could unify the interests of owners and managers.The implementation of equity incentive also could make managers focus on company's long-term interests and benefit from the growth of the company.After 1990,some listed companies in our country learned from western experience and began to try implementing equity incentive.However,due to the unique institutional environment and our country's not developed market economy,the implementation of equity incentive did not have a significant effect.The completion of the split share reform and the publishment of the Measures for the Administration of Equity Incentives for Listed Companies has created a favorable environment for the smooth implementation of equity incentive,and thus opened a new chapter for China's equity incentive plan.In order to investigate the impact of equity incentive's implementation in current environment and observe whether the announcement of equity incentive will cause abnormal stock price volatility,the paper selected the sample of private enterprises with equity incentive in Shanghai and Shenzhen stock exchange from 2007 to 2015,and use the event study to test the announcement effect of equity incentive of listed companies.Moreover,we used regression analysis to explore the key factors that may affect the effect of equity incentive announcement.Through empirical test,the paper concluded that:Firstly,there are positive market reactions on the announcement of the equity incentive in our country's stock market,especially in Window period[-10,10]?[-10,0]and[0,10].It means there is positive effect on the announcement of equity incentive and insider trading phenomenon may exist.Secondly,there are different market reactions to different equity incentive subject matters.The subject matter of stock option brings more CAR than restricted stock.Thirdly,investor sentiment has a significant positive correlation with the CAR arising from the equity incentive announcement.The higher the investor's mood,the bigger the equity incentive announcement.On the basis of the empirical research,this paper puts forward some suggestions on how to improve the information disclosure system and cultivate rational investors.