An Empirical Study On The Relationship Between The Choice Of Equity Incentive Model And The Performance Of Listed Companies

As one of the effective measures to solve the principal-agent problem,Equity incentive refers to a contract that the company makes part of the salary of the management or other employees closely related to the share price of the company,so that the interests of the company shareholders and the management or other employees' personal benefits are linked to a certain extent,by granting management or other employees in a certain proportion of the shares of the company.Stock option and Restrictive stock are two commonly used ways of equity incentive.There are significant differences between them in terms of exercise price and granting price,the period of locking and the number of granting,but the essential difference between Stock option and Restrictive stock lies in their different rights.Someone granted of a Stock option can exercise his rights in the case of favorable stock price,and he can not do the right in the case of unfavorable stock price,therefore,the person who was granted the Stock option will make profits rather than be damaged.But once a person is awarded a Restricted stock,his personal income returns with the rise of the stock price and losses as the stock price falls.This paper chooses 701 equity incentive schemes issued by the Main board and the Small and Medium board listed companies from 2006 to 2016,and divides the equity incentive schemes into two groups according to the annual variables.First of all,the multiple linear regression method is used to study the influence of different companies' equity incentive intensity and equity incentive model on the ROIC.Secondly,it uses logical regression to study the influence of the real controller nature of the listed companies on the choice of equity incentive model.Finally,combined with the first two conclusions,we judge whether the preference of equity incentive mode is a rational decision under the influence of the actual controller nature of listed companies.The empirical results show that :(1)The intensity of equity incentive has a significant positive correlation with the company's performance;(2)The incentive effect of different equity incentive mode shows the opposite result according to the annual grouping at 5% significant level.In 2006-2011,the incentive effect of Stock option is better than that of Restricted stock,while in 2012-2016,the effect of Restricted stock incentive is better than that of Stock option.(3)State-owned listed companies tend to choose Stock options as a way of equity incentive,while non-state-owned listed companies tend to choose Restricted stock as the way of equity incentive.In addition,this paper further divides the equity incentive schemes into four groups by the nature of the company's actual controller and the annual variable.Through multiple linear regression analysis,it is found that Stock options can enhance corporate performance better from 2006 to 2011 in non-state-owned listed companies,while Restrictive stocks can improve the company's performance more from 2012 to 2016 in non-state-owned listed companies.After the further grouping of the stateowned listed companies,the conclusion is consistent with the non-state-owned listed companies,but there is no significant level because of the sharp reduction in the sample size.Combined with the empirical results,this paper makes a judgement: Strong evidence supports the decision of non-state-owned listed companies to choose Restricted stock in the past ten years as it was irrational decision from 2006 to 2011 and it was a rational decision from 2012 to 2016.The weaker evidence supports that the state-owned listed companies tend to choose the decision of Stock option in recent ten years as it is a rational decision from 2006 to 2011 and it belongs to irrational decision from 2012 to 2016.Therefore,this paper suggests that a listed company should choose a suitable equity incentive mode according to the actual situation,expand the intensity of equity incentive under the circumstances permit,and try to invite intermediaries to design the equity incentive plan carefully.