Research On The Economic Consequences Of Equity Incentive In Listed Company M

The formation of the modern enterprise system directly leads to the separation of managerial control and ownership,which cause conflict between principal and agent.In order to reduce agency cost,to keep employee retention rate and increase shareholders's wealth,a mount of companies share risk with incentive targets by rewarding a certain amount of equity.Howerver,as relative practice increasing,people find that some practices do not achieve the established goal.The economic consequences of equity incentive have begun to get the attention of the practical and theoretical circles.With the improvement of relevant regulations,all sectors of industry are actively exploring the application of equity incentive.For the paper industry,the practice of equity incentive is rare and the economic consequences of implementation are also very uncertain.Therefore,in order to better guide the practice,this paper selects the large paper compay M,which has implemented two different types of incentive schemes,as the research object.This dissertation finds three different dimensions reflecting the economic consequences of equity incentive from original intention and relevant theory,which are financial performance,market performance and employee retention.Specifically,financial performance refers to agency costs,efficiency of investment and overall financial indicators.Market performance focuses on stock market and sales performance.Employee retention emphasizes on employee structural change and turnover rate.After theoretical analysis,this paper also analyzes company M's two implementation of equity incentive plan,and finally puts forward some suggestions.The dissertation found that although the two incentives of M have welfare motivations,they all have a significant effect on the overall performance.Overall,the incentive effect of the second restrictive stocks is more obvious.Specifically,two incentive schemes are helpful to reduce the agency cost,improve investment scale and investment efficiency.As for financial performance,the first incentive plan has a more positive effect on the operation ability but has no significant impact on debt paying ability.Besides,all incentive plans have improved the company's growth ability to a certain extent.In terms of market performance,all incentive scheme obtained the positive value of CAR,which increased the stock market value.And the market share is also significantly improved after the implementation of the incentive plan.Finally,the two equity incentive programs both have a positive impact on employee retention.