Case Study Of Timing Behavior In ZTE Equity Incentives

The development of China's equity incentive system is very rough,and the current equity incentive system is not perfect.However,in recent years,Chinese enterprises have developed very rapidly.For better corporate governance,professional managers have entered the stage,but the agency cost caused by the separation of powers is very difficult.Equity incentive is a method for listed companies to improve the company's incentive system and improve the company's value,because the equity incentive method can solve the problem of separation of powers in corporate governance.This method is a long-term,benefit-sharing incentive that will pass.Granting a certain proportion of shares to the managers,so that the interests of managers and the interests of the company are bundled together,and the conflicts of interest between shareholders and managers can be effectively resolved.To a certain extent,managers will be more inclined to the position of the interests of the company's owners,mitigating the negative impact of information asymmetry.However,with the evolution of the market,the drawbacks of the equity incentive method are gradually emerging.For the sake of their own interests,the management is likely to produce opportunistic timing behaviors,and choose to issue equity incentives at the lowest point of the company's stock price.Previously,negative news will be disseminated,and after the announcement,the company's positive news will be disseminated to raise the stock price,which will make the company's performance increase for a period of time after the equity incentive announcement date.This will enable executives to earn more benefits from equity incentives in the future when companies develop well.However,such behavior itself not only harms the interests of small and medium-sized investors and major shareholders of the company,but also reduces the efficiency of capital allocation and market pricing,which is not conducive to the management of corporate governance and capital markets in China.Therefore,accelerating the study of timing behavior is of great significance to the regulation of investment and financing behavior of listed companies in China and the improvement of resource allocation efficiency in China's capital market.As a high-tech enterprise with a long history,ZTE has carried out equity incentive plans many times before and after.This move has attracted much attention and discussion,and it is worthwhile to conduct in-depth researchon its case.Taking ZTE's equity incentive plan as an example,this paper analyzes the timing behavior announced by the enterprise equity incentive announcement.Firstly,through the trend of the CAR before and after the publication of the draft equity incentive plan,it is judged whether there has been a change trend of the first drop and then rise,so as to preliminarily judge whether it has a timing behavior.Subsequent support evidence for the above judgments was obtained through analysis of relevant indicators and data on information disclosure and earnings management.Finally,this paper will give corresponding conclusions and inspirations on the research of the above problems,explain whether ZTE has taken the timing behavior of equity incentive schemes.Aiming at the timing behavior of equity incentives for listed company managers,it gives corresponding suggestions from information disclosure,corporate governance mechanism and government supervision,hoping to reduce the occurrence of timing behavior and improve China's equity incentive market.