Research On The Relationship Between Equity Incentive And Corporate Value

The equity incentive is a corporate governance mechanism,was introduced into China in the early 1990 s.After more than 30 years,the development of the equity incentive in China has entered a stage where there is a relatively complete institutional environment from the non-institutional environment.2005 is a turning point in the development of equity incentive in China.Before this year,due to China's failure to establish a basic institutional environment,there were many obstacles to the application of equity incentive in China,after 2005,the equity incentive mechanism has gradually been valued by the Chinese society,and the related institutional environment was gradually established.Firstly,the completion of the equity division reform has effectively promoted the healthy development of the capital market,which would help companies introduce market-based incentive.Secondly,It provides guidelines for the application of equity incentive that the issuance of the “Measures for the Administration of Equity Incentive for Listed Companies(Trial)”.Since the year of 2006,more and more listed companies have incorporated equity incentive into corporate governance mechanisms.Equity incentive have a positive effect on corporate value,and the degrees of influence is different in different life cycle stages.Therefore,it is significantly to combine life cycle theory to study the impact of equity incentive on corporate value,which can enrich the content of research on the relationship between equity incentive and corporate value and provide some references for companies to formulate equity incentive plans.In the theoretical community,most scholars regard all sample companies as a static whole to study the relationship between equity incentive and corporate value(performance).However,companies have different life cycle.Companies in different life cycle stages have different company strategies,financial conditions,problems between owners and agents,and heterogeneity of human resources,which could affect the effect of equity incentive.In addition,it is defferent due to different life cycles that the relationship between the overall strength of equity incentive,the strength of incentive for senior managers,the strength of equity incentive for core technical personnel,the incentive models and corporate value.In order to verify the hypothesis,Tobin's Q value is selected as a measure of corporate value,the explanatory variables are included by the strength of stock incentive,the incentive strength of senior managers,the incentive strength of stocks of core technical personnel,and the incentive models,and finally,this paper proposes five models and performs regression analysis.The following conclusions are drawn:(a)There is a positive correlation between the strength of equity incentive in listed companies and the value of the company;(b)Secondly,from the comparative analysis of the two subsamples of long-term and mature periods from the whole sample,it was found that the implementation of equity incentives in the growth stage is more effective than the mature stage;that granting equity incentive to core technicians during growth periods has a greater effect on corporate value than maturity;that incentives granted to senior executives by growth companies have a significant negative impact on the value of the company;that granting equity incentives to senior executives has a positive but not significant effect on the value of the company in the mature period;that adoption of stock option in the growth period has a better effect on the improvement of the value of the company;and that adoption of the restricted stock model in the mature period has a better effect on the promotion of the value of the company.In the end of this paper,I put forward corresponding countermeasures and suggestions about the application of equity incentive,and point out the limitations of the article and issues that can be further studied.