Research On The Effect Of Equity Incentive Plan Of A-share Listed Company

In the modern enterprise system,the separation of ownership and management rights leads to the agency problem.In order to reduce agency costs,enhance company performance,and achieve the goal of maximizing shareholders' profits,many companies have implemented equity incentives in the form of stock options and restricted stocks by granting a certain number of corporate shares to the senior managers.Therefore,managers will work hard to improve the company's performance in order to gain the benefits of equity appreciation.In April 2005,the China Securities Regulatory Commission issued the "Circular on the Issues Concerning the Pilot Project of the Reform of the Share Splitting of Listed Companies",which opened the prelude to the reform of the equity split in China.The full circulation of the stock market has solved the long-standing disadvantages,creating the necessary conditions for the implementation of the equity incentive system.With the basic completion of the reform of the equity division of listed companies,the further improvement of the "Company Law" and the "Securities Law,"the pro'mulgation of the "Measures for the Management of Listed Companies' Stock Equity Incentives(Pilot)",and the introduction of relevant supporting policies for accounting and taxation,China's equity incentive system is on the right track.Since 2010,the number of listed companies implementing equity incentive plan has been increasing,and related policy systems have been increasingly perfected.Under this background,this paper studies the development status of equity incentives for listed companies in China and the implementation effects of equity incentive plans.As of December 31,2017,there were a total of 1,156 listed companies that launched equity incentive plans in China,involving 1,827 programs.From the industry perspective,the equity incentive is mainly concentrated in the manufacturing and information technology industries;from the perspective of incentive models,stock options and restricted stocks are the most commonly used;from the perspective of the nature of equity,private enterprises that implement equity incentive plans accounts for more than 80%of the total;geographically,it is mainly concentrated in economically developed areas such as Guangdong,Zhejiang,Beijing and Jiangsu.This article selected the Shanghai-Shenzhen A-share listed companies that implemented the equity incentive plan from 2013 to 2016 as the research object.After screening and processing,662 valid sample data were obtained.First,select ten financial indicators from the four aspects of profitability,operational ability,growth ability,and solvency of listed companies.Factor analysis is used to extract four common factors and their expressions are calculated from the component score coefficient matrix.Therefore,the comprehensive performance indicator can be expressed by the four common factors which are assigned by weight.The comprehensive performance indicator is taken as the explanatory variable,the proportion of equity incentives,that is,the total number of equity incentives in the total equity,is taken as the explanatory variable.The proportion of institutional holdings,concentration of ownership,corporate attributes,two-in-one,independent directors,and enterprise scale are taken as control variables,through Pearson correlation test and multiple linear regression model found that there is a significant positive correlation between equity incentive level and company operating performance,that is,the higher the stock incentive level,the better the implementation of the equity incentive plan.And the role of the equity incentive model is mainly reflected in the regulatory effect.Compared with the restricted stock model,the equity option model has a greater positive impact on the listed company's operating performance.In addition,the proportion of institutional holdings,the nature of the company,and the proportion of independent directors have a significant positive effect on the operating performance of listed companies.This shows that privately-held listed companies with high proportion of institutional holdings and relatively high number of independent directors will have better operating performance through implementing equity incentive plans.The degree of equity concentration has a significant negative impact on the operating performance of listed companies.That is,the more concentrated the equity,the worse the corporate performance.In order to improve the effectiveness of the equity incentive system,this paper also proposes detailed policy reform measures.First,to further improve the capital market,including the improvement of the information disclosure system for the capital market and the gradual progress of the reform of the registration system;increase the proportion of institutional investors,increase the degree of professionalism in the capital market;increase the administrative penalties for violations of laws and regulations,and maintain capital Market order;establish and improve a multi-level capital market system,improve the transfer system and so on.Second,improve the professional managers market,including the introduction of professional managers market rules and regulations,the formation of a restraint mechanism;improve the education system reform,accelerate the cultivation of talent;encourage the development of headhunting companies,promote the flow of senior personnel and so on.Third,improve the corporate governance structure,including the improvement of the company's remuneration committee system,the selection of independent directors,and the establishment of an independent director's professional market.Fourth,establish a systematic performance appraisal system that specifically includes a combination of indicators system,comprehensive performance evaluation from the company,business unit and individual level,etc.Fifth,improve the financial and taxation related supporting system.Specifically,it includes improving the financial and accounting system of equity incentives,increasing tax incentives,and so on.