On The Effect Of Stock Appreciation Rights Incentive Scheme On Corporate Performance

In 2005,China implemented the split share structure reform,which created a good opportunity for the listed companies to implement equity incentive.From the implementation of the Measures for the Administration of Equity Incentives for Listed Companies(Trial)on January 1,2006,to the official implementation of the Measures for the Administration of Equity Incentives for Listed Companies on August 13,2016,the number of equity incentive schemes launched by listed companies in China has increased significantly.By the end of February 2018,China’s A-share listed companies have launched 1899 equity incentive schemes.Among them,as a special incentive mode in the field of equity incentive,the stock appreciation rights accounts for only 24,and only 18 companies are truly implemented.To some extent,it reflects the incentive effect of stock appreciation rights is in doubt.This paper takes this as the research content,in order to explore the effect of stock appreciation rights on corporate performance in China’s A-share market.This paper elaborates the related concept and theories of the stock appreciation rights,analyzes the effect mechanism of the stock appreciation rights on corporate performance,and summarizes the current situation of stock appreciation rights in China’s A-share market.By selecting the case of Tigermed’s stock appreciation incentive scheme,this paper analyzes the specific content,implementation process and motivation of the incentive scheme,and analyzes the effect of stock appreciation rights on corporate performance from three aspects:market reaction,economic value added(EVA)and accounting performance.And puts forward some suggestions to optimize the effect of stock appreciation rights on corporate performance in China’s A-share market——Implementing the incentive scheme for stock appreciation rights for the corporate itself;Linking the conditions for exercising rights with the performance after incentives are completed;Perfecting the restriction mechanism of system specification;Improving the laws and regulations of equity incentive.The main points of this paper are as follows:Firstly,the incentive scheme of stock appreciation rights has a positive effect on company’s short-term performance and has no significant effect on long-term performance.This is also the reason why the application of stock appreciation rights is not widely used in China’s A-share market.Secondly,the incentive effect of the stock appreciation rights is obvious in the year of granting and exercising rights.Whether granted or exercised,it has a positive incentive effect on the stock price changes.At the same time,in the year of granting and exercising,Tigermed’s economic value added and the financial performance were obvious increased,but the incentive effect was gradually weakened after exercising rights.Thirdly,the rational design and application of stock appreciation rights scheme can ensure the incentive effect.At present,the case study of the stock appreciation rights in China is limited to the H-share listed companies,this paper attempts to find out the effect of stock appreciation rights on corporate performance in the A-share market based on the research on Tigermed,an A-share listed company.The main contributions of this paper are as follows:First,model derivation,which clarifies the intrinsic correlation between stock appreciation rights incentives and corporate performance.Second,based on the analysis of the case of Tigermed,this paper gives a glimpse of the effect of stock appreciation rights incentives on the company’s short-term performance and long-term performance.On the one hand,it makes up for the lack of existing research and provides ideas for future research;On the other hand,it also provides theoretical support for the innovative design and practice of the stock rights incentive schemes of the listed companies in China.However,due to the limited Sample Firms and the incomplete information disclosure in the A-share market,the results may be deviant to the results of the research.