Empirical Research On Relationship Between Equity Incentive And Company Performance

The long-standing contradiction between the principal and the agent makes equity incentives a better choice for reconciling principal-agent conflicts.However,some bizarre questions in the process of implementation of equity incentives,which has given the public a fresh look at the relationship between equity incentives and company performance.However,most studies often ignore the influence of corporate governance on the relationship between the two parties,so they have certain limitations.A series of corporate governance scandals,which forced the compensation committee system of western countries to be perfected,also prompted China to explore the system.?The Measures for the Management of Stock Incentives for Listed Companies(Trial?)?,promulgated in 2006,granted the right to the design and implementation of equity incentive plans to the compensation committee.Based on the three layers principal-agent theory,this paper attempts to study the relationship between equity incentive and corporate performance from the perspective of governance quality of supervisors,and further study the influence of the quality of the compensation committee with the right of contract making on the equity incentive contract,in order to test its effect on the relationship between equity incentive and corporate performance.This article reviews the relevant research literature of the equity incentive and compensation committee,based on the theory of optimal contract and management power,the theoretical analysis framcework of stock incentive,compensation committee government quality and company performance is proposed.On the basis,this article from the perspective of normative research and empirical research,listed companies that issued and implemented equity incentive plans from 2006 to 2013 in China's A-share market as research samples,Using factor analysis,ordinary least squares,Logistic regression,two-stage least-squares method,etc.to test the effect and mechanism of compensation committee quality on the equity and company performance.Through research,this article has reached the following conclusions:First,equity incentive promoted the company's performance,especially the promotion of accounting performance.Second,the higher the quality of the compensation committee,the more it will play a role in corporate governance through responsible and professional performance.This will significantly enhance the role of equity incentives in enhancing corporate performance.Third,compared with state-owned enterprises,the quality of the remuneration committee of private enterprises has a more significant effect on the positive relationship between equity incentives and company performance.Fourth,the higher the quality of the compensation committee,the more able and motivated to design a reasonable equity incentive contract for the executives,through an effective equity incentive contract to make the equity incentive system work,and to protect the interests of shareholders.Fourth,the higher the quality of the remuneration committee,the greater the ability and motivation to design reasonable equity incentive contracts for senior executives to protect the interests of shareholders.Fifth,the higher independence of the compensation committee,the more likely to reduce the incentive intensity for senior executives to the effective range,and the incentive period will be extended and the incentive intensity will be increased;The professional knowledge background and business background make the members of the compensation committee effectively improve the incentive conditions and extend the incentive period;Compensation committee member s'incentives effectively suppress strength of equity incentives to senior executives.This article not only enriches the research literature on equity incentives and company performance,but also expands the research area of the compensation committee system.The research shows that the high quality compensation committee is conducive to the formation of an equity incentive contract to effectively motivate and supervise the executives,so it will strengthen the role of equity incentive to improve the performance of the company.However,at present,the system of the compensation committee in our country is still not perfect,which restricts the effect of the compensation committee on enhancing company performance through equity incentives.Therefore,it is still the core work to continue to improve the relevant governance mechanisms and construct the relevant regulations.