The Influence Of Equity Incentive Mode On Company Performance

Equity incentive was first adopted by some American company.With the social division of labor notably increasing and the ownership structure of listed companies changing,since the last century,ownership and management separation problem has become normally.The management of day-to-day operating decisions,driven by self to maximize their personal interests,may harm the interests of company.In order to coordinate this contradiction,equity incentive,as a new type of long-term compensation model,has become the best choice to balance the interests of shareholders and managers,meanwhile effectively improve the performance of company.The equity incentive system has been implemented officially since 1993.Due to the influence of China's unique economic environment,laws and ownership structure,early development is quite slow.And only several sample data can be chosen.Under this background,most listed companies hold the cautious skepticism towards equity incentive's positive impact on corporation performance.With the continuous enrichment of theoretical research and the abundant verification of practice results,the number of listed companies and non-listed company carrying out equity incentive has been increasing by leaps and bounds since2011.About 8 kinds of equity incentive tools have been learned and created,which provide a wide range of reference for company to choose equity incentive,including stock option,restricted shares,phantom stock,stock appreciation right and ESOP.In recent years,under the background of China's macroeconomic growth decline,in order to maintain the smooth transition of traditional industries,innovation driven and attracting high-quality talents have become the primary goal of most listed companies.So the incentive aiming at attracting the talents of industry and achieving the performance index has been paid great attention by shareholders in listed companies.In addition,the Commission,issued on December 18,2015,planned to implement the Equity Incentive of Listed Companies Management Approach Draft in 2016.It is nearly 10 years the Commission systematically and comprehensively reformulated the management of relevant norms and revised comments,in order to strengthen the basic information disclosure,relax the market access regulation,enhance supervision of industry,and gradually form a company with independent judgment oriented equity incentive system.In conclusion,combined with the macroeconomic environment and external policy guidance,it fully indicates that the equity incentive system will become a hot issue in the field of corporate governance in China.This paper takes 678 listed companies with equity incentive in A stock market for 2008-2015 years as samples.The ratio of incentive mode to total capital is chosen as the index of incentive level.Weighted average return on equity is chosen as a measure of corporate performance.Some financial indicators are added to measure the operation of companies as control variable,and then we establish a multiple regression model.First of all,the relationship between incentive level and company performance is discussed.Moreover,the influence of single equity incentive mode and compound equity incentive mode on firm performance is discussed.The empirical research shows that there is a correlation between the level of equity incentive and corporate performance,and the performance of the company increases first and then decreases with the level of equity incentive.And the incentive effect of compound mode is better than that of single mode;Among single modes,the effect of the restricted stock is better than stock option.Conclusions as a result,from the above two angles,this paper discusses the relationship between the level of equity incentive and corporate performance.The results of the empirical correctly explain that listed companies prefer to choosing the restricted stock incentive mode.It provides a reference for the level of equity incentive formulation and the choice of incentive mode.