Empirical Research On Equity Incentive And Corporate Performance

Equity incentive is regarded as a long-term incentive mechanism,which improves corporate performance and reduces the agency cost so as to maximize shareholder wealth.As an incentive mechanism,it is beneficial to promote the sustainable development of enterprises from long-term perspective.And equity incentives also have a good effect on improving firm's performance and dealing with agency problems between management and shareholders.Incentive science and reasonable enterprise performance evaluation system play significant roles in measuring the effect of equity incentive mechanism.In fact,the information technology industry is an industry which is more intended to implement equity incentive mechanism.Therefore,the practice and specific impacts of incentives can be explored based on analysis of the information technology industry.In this paper,we explicitly examine the links from equity incentives mechanism to the changes of performance evaluation of the listed companies in this industry.This paper attempts to make a contribution to this research system by studying the impact of information technology listed companies on the implementation of equity incentives on company performance.It is expected that the equity incentive mechanism can better serve the listed companies in China and exert its maximum effectiveness.In this paper we select 182 quoted information technology companies in 2016 as samples in combination with theoretical research of equity incentives mechanism and actual corporate performance of companies which has implemented equity incentives policies.Therefore,there are 88 companies carrying out equity incentives mechanism among these selected listed companies.We compare companies with implementation of stock incentives mechanism with other companies which has not used.In particular,we define equity incentives mechanism as an independent variable and in contrast use corporate performance to be a dependent variable in connection to these companies which has implemented stock incentives mechanism.And we also use control variables as following: company size,financial leverage,growth capacity,cash flow,executive compensation incentive,ownership concentration,board size and proportion of independent directors.Using polynomial regression model,we examine the relationships between equity incentives mechanism and corporate performance and how equity incentives influence the corporate performance in information technology industry.Collectively,our conclusions are as follows: 1.The equity incentive of listed companies in the information technology industry can significantly improve the performance of the company.2.It illustrates that equity incentives of the listed companies in information technology industry have an inverted shape of “U”.Finally,based on the experiences and lessons of foreign equity incentives,and in response to the problems in the implementation of China's equity incentives,the corresponding policy recommendations are proposed: to improve the governance structure of listed companies,to determine the equity incentive ratio scientifically and reasonably,and to improve the relevant laws and regulations.