A Study On Institutional Investors And Equity Incentive Effect From Corporate Governance Perspective

Two Right Separation in modern enterprise system causes agent problems.Equity Incentive is a typical stimulation method.It is considered to effectively reduce the agent problem between managers and shareholders.But the theoretical researches and practical experience prove that the result of equity incentive is uneven.Equity incentive will become a tool for managers to seek personal gain and harm the interests of shareholders in certain circumstances.Up to now,academia and practitioners are still discussing how to give full play to the role of equity incentive.Data show that after the announcement of equity incentive program of listed companies,the proportion of institutional investors has risen significantly.As an important participant in the capital market,institutional investors are actively participating in corporate governance.So whether institutional investors can effectively curb executive self-interest behavior and improve the effectiveness of equity incentive?Based on the perspective of corporate governance,this paper studies the company's equity incentive plan and institutional investors'shareholding situation.The research questions are as follows:First,do China's A share listed companies implement equity incentive plan,attracting more institutional investors to hold company stock?Second,how does the listed company implement the actual effect of equity incentive?Is it possible to mitigate the problem of principal-agent?Third,if a listed company attracts more institutional investors to hold shares,do institutional investors play their governance role to alleviate the principal-agent problem and enhance the implementation effect of equity incentive?First of all,this paper selected the 516 listed companies which announcement the equity incentive in 2009-2015.From statistical analysis,found that the company launched equity incentive plan,the proportion of institutional investors holding a significant increase.And they prefer the equity incentive plans which use stocks as incentive targets and which are high incentives.Secondly,Select the 2009-2013 in the first announcement of the implementation of equity incentive 296 A shares 1943 observations,and investigate the financial situation and governance situation of these companies for 2009-2016.This paper found that the equity incentive can significantly improve the performance of the company.However,it can not alleviate the principal-agent problem between shareholders and executives.Thirdly,through the unbalanced panel data model with interaction terms,I found that institutional investors in the equity incentive played a positive role in corporate governance,improve the equity incentive effect,improve the performance of the company directly and indirectly.Finally,the classification of institutional investors is carried out.I Found that independent institutional investors are more willing to hold the implementation of equity incentive plan shares of listed companies,and played a significant role to enhance the governance.The effect of equity incentive.Therefore,institutional investors can effectively promote equity incentive system,alleviate the agency problem,especially independent institutional investors.And the development of institutional investors can improve equity incentive system in China.