Executive Equity Incentive,the Quality Of Internal Control Information Disclosure And The Cost Of Equity Capital

Compared to the West,the equity incentive system in our country was started very late.Along with the capital market is gradually perfected,the equity incentive is becoming a focus in theoretical and practical circles.The original purpose of the equity incentive system is to solve the principal-agent problem between the management and shareholders because of the different objective functions.The specific mechanism is as follows.When executives have a certain incentive to motivate,its vital interests are closely linked to the value of the enterprise.This will enable executives to stand in the position of shareholders to consider the problem and reduce the agency cost of the enterprise,finally,the incentive and supervision role of equity incentive is played.But from the current research situation at home and abroad,Scholars have not formed a unified conclusion on the effect of corporate governance of the executive equity incentive.Most scholars challenge the implementation effect of executive equity incentive,not only does the executive equity incentive do not reduce the cost of principal agent effectively,instead,it will lead to executive shortsightedness.It will also lead executives to use their duties for their own welfare.This will increase the degree of information asymmetry between investors and enterprises and increase the risk of investor investment to the enterprise.To this end,investors will ask for a higher rate of return as compensation,thus,the cost of the equity capital of the enterprise is increased.Therefore,the effectiveness of executive equity incentive still needs to be further verified.This article takes 4177 listed companies of Shanghai and Shenzhen A shares for 2009-2016 years as research samples,using the empirical analysis method to study the relationship between executive equity incentive and the cost of equity capital.The results of the study show that the executive equity incentive has no effect on reducing the cost of equity capital.On the contrary,after the implementation of equity incentive,the cost of equity capital has not decreased but has risen.There is a significant positive correlation between the executive equity incentive and the cost of equity capital.Further studies have found that improving the quality of internal control information disclosure of enterprises can effectively promote the executive equity incentive to play the effect of corporate governance.Executives' equity incentives can play a role in reducing the cost of equity capital in enterprises with high quality of internal control information disclosure.The conclusion of this article shows that the executive equity incentive plan implemented by Chinese enterprises does not effectively exert the effect of corporate governance,the conflict of principal-agent has been aggravated to a certain extent.It is not beneficial to reduce the cost of equity capital in enterprises.This conclusion is in line with the views of many mathematicians at present.On this basis,this article finds that the improvement of the quality of internal control information disclosure can effectively promote the role of executive equity incentive,the joint effect of the two can significantly reduce the cost of equity capital in the enterprise.The conclusion of this paper is of certain guiding significance for the enterprises to carry out the executive equity incentive in the future.