Research On Motivation And Effect Of Stock Incentive In Listed Companies

As a long-term incentive mechanism,stock incentive has been adopted by many listed companies in China because of its obvious positive role in improving company performance,encouraging and stabilizing senior managers and core technical personnel,and at the same time reducing agency costs and improving corporate governance structure caused by the separation of ownership and management rights of modern enterprises.The solution of stock incentive to agency problem is to give some shareholders’ rights and interests to senior managers conditionally,so that managers can manage the company as shareholders,so as to unify the goals of managers and owners.However,a series of financial crises in recent years imply that the stock incentive plan may not bring good incentive effect to the company.The cases of Yili’s 300 million yuan option cost leading to performance loss,Hua Ling Iron and Steel’s stock incentive loss of 2.7 billion yuan in 2010,etc.can not help but arouse thinking: whether the implementation effect of the stock incentive system is related to its design motivation.Chinese scholars generalize the two types of motivation as incentive and welfare motivation,and summarize the effects of the two types of motivation: incentive motivation and welfare motivation have obvious differences in means and purposes of implementation.The purpose of incentive motivation is to integrate the general interests of senior managers and shareholders of enterprises in order to maximize shareholders’ rights and interests and reduce the cost of principal-agent;while the welfare motivation is mainly to enable senior managers to meet their own interests,so the matching conditions of welfare issuance are not proportional to incentive policies.According to the questionable validity of stock incentive of HISENSE-ELECTRIC CO.,LTD,this paper analyses the shortsightedness of senior managers and the harm to the long-term development interests of the company instead of realizing the long-term effectiveness of equity incentive.It also provides an improvement plan for HISENSE-ELECTRIC CO.,LTD,that is,to design stock incentive scheme with the long-term development of the company as the goal,and to perfect the executives with incentive motivation as far as possible.The stock incentive scheme avoids welfare motivation.Firstly,starting with the research background and the significance of topic selection,this paper summarizes the relevant literature at home and abroad,and introduces the content of this study and the research methods used.Then it summarizes the concept of stock incentive and the criteria for judging the two motivations.Secondly,it takes HISENSE-ELECTRIC CO.,LTD as a typical case to conduct in-depth analysis.Through the design characteristics of its stock incentive scheme,it analyzes its equity incentive motivation and evaluates the specific implementation effect caused by the motivation.Then it puts forward the improvement countermeasures and optimization suggestions for the stock incentive scheme of HISENSE-ELECTRIC CO.,LTD.Finally,the full text is summarized and the limitations of current research are discussed.Through case analysis,this paper demonstrates and improves the judgment methods and possible economic consequences of welfare-type and incentive-type motivation in the existing literature.It mainly uses HISENSE-ELECTRIC CO.,LTD to compare the financial performance and internal management of enterprises before and after the implementation of stock incentive,that is,2008-2019,in order to improve the previous studies on stock incentive motivation for enterprises after the exercise of power.The evaluation criteria of performance impact enrich the existing academic viewpoints,and then contribute to improving the long-term effect of stock incentives for executives of listed companies.