Research On The Impact Of Equity Incentive On Performance Of LETV

The separation of ownership and management in modern enterprise leads to the principal-agent problem such as information asymmetry,moral hazard and adverse selection.As a possible solution to this problem,equity incentives arise.Managers are given a certain number of stocks of the company,sharing both residual income and enterprise risk as shareholders.This can build a strong connection among the interest of the enterprise,managers and business owners,stimulating managers' efforts to improve operational efficiency,improving the performance of the company,and solving all kinds of principal-agent problems.In foreign countries,equity incentive system has emerged for over 60 years,while China started late.In December 2005,Measures for the Administration of Equity Incentives of Listed Companies(Trial)was promulgated.After that,China's equity incentive system developed rapidly.To study the influence of equity incentive in China,we did literature research,comparative analysis and case study,based on the theory for separation of ownership and control and agency theory.This paper focuses on the implementation of equity incentive in LETV,introducing the development and implementation of equity incentive in the industry of information output,software and information technology services,and provide a detailed study of the plan and implementation of equity incentive in LETV.Then,according to the financial data of LETV from 2010 to 2016,we compare and analyze the financial and non-financial performance of LETV before and after the implementation of equity.The financial performance is analyzed from four aspects: operational capability,profitability,debt paying ability and developing ability,and the same indicators in the same industry are used as control group to exclude some interference factors.In the non-financial performance,the turnover rate and innovation ability of participants in the equity incentive are analyzed.Through the analysis we can see that the financial performance increased significantly,incentive target turnover rate dropped,and innovation capacity has been considerable improvement,showing that the influence of the implementation of equity incentive for LETV is positive.In order to find out the correlation between corporate performance and equity incentive,a large number of empirical studies have been carried out in China,but there is still no consistent conclusion.Thus I looked into the real case of LETV,studying the motivation of implementing equity incentive,specific measures and implementation effect,and summarized the advantages and disadvantages of the equity incentive plan,putting forward some make-up suggestions for its shortcomings,with the hope of providing some reference on how to make scientific and effective the equity incentive plans for the listed companies in the information output,software and information technology services industry.