Research On Optimization Of Equity Incentives In S Real Estate Companies From The Perspective Of Financial Performance

The equity incentive system appeared in the United States in the 1950 s.It was konwn in other western countries in 1970s-1980 s and was promoted to countries around the world in the early 1990 s.The target of equity incentives is mainly to solve the conflict of interest which from the principal-agent relationship.The fundamental point of equity incentive is to unify the interests of the owner and the operator,and encourage the operators to pay attention to the long-term development of the company,which can reduce the short-sighted behavior of the operators.More and more listed companies have begun to contact,understand and implement the equity incentive system since Measures on Administration of Equity Incentive for Listed Companies(Trial)were issued by China in 2005.However,compared with the mature equity incentive system in western countries,Chinese equity incentive system is still in the “developing” stage.Specifically,the relevant systems are not perfect,the market environment and regulatory environment are asked for further improvement.This has led many companies failing to improve business performance after the implement of equity incentives.Even some enterprises do not know how to use incentive models,incentive targets and incentive assessment indicators,so that equity incentives are difficult to play their role in bussiness.About the relevant research on equity incentives,most domestic academic circles use the large sample data of listed companies in China for empirical research.Such research can provide solutions to common problems in the application of equity incentives in listed companies in China.Based on the research results of previous scholars' empirical research,specific cases can be selected for individualized analysis,and relevant analysis can be used to draw conclusions and provide solutions for their individual problems.After comprehensive consideration,this paper decided to select the high-quality enterprise in the real estate industry in China's pillar industry-S real estate company(hereinafter referred to as: S company)for case study.Combined with the operating mechanism of equity incentives and related theoretical foundations,the motivations of S company's implementation of equity incentives are analyzed from macro factors,industry factors and their own factors.Meanwhile,this paper chooses A-share listed companies that have not implemented equity incentives and implemented equity incentives in the real estate industry as a horizontal comparisonobject,analyzed financial effect of S company's implementation of equity incentives from four aspects: profitability,operational capability,solvency and development capability.The article also uses the event research method to analyze the short-term market reaction of S company after implementing equity incentives,and concludes that S company's equity incentives have a positive effect on improving financial performance and stimulating stock price growth.Finally,according to the analysis results and the comparison with the equity incentive plan of the comparison company,the equity incentive plan of S company has four problems: narrow scope of incentive object,single incentive evaluation index,too simple exercise arrangement and unreasonable incentive mode.Additionally,according to these four problems,corresponding four suggestions: reasonable determination of incentive targets,diversification of incentive assessment indicators,comprehensive consideration of exercise arrangements and changes to incentive models are proposed.