Equity Incentives?Political Connection And Corporate Performance

Equity incentives as an effective governance tool to ease the principal-agent problem are increasingly being discussed by the theoretical and practical circles.In recent years,equity incentives have been implemented in an enterprise-wide manner.As of December 31,2016,a total of 763 listed companies in China announced and made 1,409 equity incentive plans.However,whether the implementation of equity incentives can effectively improve the listing The company's performance level,to achieve the expected incentive effect of listed companies? At the same time,the use of incentive mechanisms needs supporting mechanisms.Existing research has gradually begun to consider the impact of the implementation of equity incentives from the perspective of internal corporate governance and external supervision mechanisms.China is currently in a special period of transition from a planned economy to a market economy.The government has a dominant position in the market and can determine the path of further survival and development of the enterprise to a certain extent.Within the company,it is represented by the board of directors and senior management members.The corporate governance and management of the company also plays an irreplaceable role in corporate governance.Based on this,this article cuts in from the perspective of political ties and studies the politics of corporate and government with the political background of key corporate management members as the carrier.Whether contact can play a role in the effect of equity incentive implementation on business performance;and specifically,what role does it play?Through the analysis of relevant theoretical levels,and summarizing and collating the current research literature,the final research object chosen in this paper is the 2004 sample data for implementation of equity incentives during the period of 2008-2016,through descriptive statistics of the data,Relevance analysis and regression analysis make a detailed discussion of the influence of political ties on the relationship between equity incentives and company performance.For stock incentives,this article studies from the perspective of equity incentive strength;for political connections,this article studies from the perspective of general political connections and specific political connections.Among them,for the specific political connections,this paper puts forward two dimensions of the strength and depth of political connections,and through the construction of the index system and the use of AHP to assign weights to each index,the strength of the political connections of the listed companies is measured.This article puts forward two assumptions,firstly that equity incentives can improve the performance of the company;secondly,from the three perspectives of generalized political connections,the strength and depth of political connections,it is believed that political connections have a negative impact on the implementation of equity incentives.Through empirical tests,the following results are finally obtained:(1)In listed companies that implement equity incentives,the incentive intensity is significantly positively related to performance,and this incentive effect has a long-term effect.(2)Generalized political ties have a regulatory effect on the effect of equity incentives,and this adjustment is negative.(3)Through further research,the strength of political connections and the depth of political connections have also played a negative regulatory role in the implementation of equity incentives.In the end,this paper proposes related policy recommendations based on the conclusions.