Empirical Study On The Impact Of Equity Incentives On Corporate Performance

The issue of executive incentives has always been a hot topic in the theoretical and practical circles.Classic entrustment-agent theory believes that the main goal of executives is to maximize the interests of shareholders,so the incentive design linked to company performance is very important.The equity incentive is a useful attempt to bundle the interests of executives with the interests of the company for a long time.In the past three decades,in the developed economies such as the US,the equity incentive schemes for senior executives have been widely used.The theoretical community has also carried out rich and fruitful research on the implementation effect of equity incentives.The research results generally believe that equity incentives can effectively improve company performance.However,after the implementation of equity incentives in the theoretical circle,the research on the path of corporate performance improvement through major strategy or investment decision-making is less concerned.This paper believes that the in-depth study of this issue can more clearly understand the high level of equity incentive implementation.Understand the influence mechanism of decision-making behavior,thus deepening the understanding of the effectiveness of equity incentives in theory and practice.M&A(merger and acquisition)is an important strategic means for the company to rapidly expand its market and acquire technology.The most profound influence on M&A behavior is the company's executives.Therefore,this paper cuts in from M&A behavior and studies the impact of long-term strategic behavior on equity incentives.At the same time,the company's different governance environment will have a profound impact on equity incentives,so this paper has carried out from the perspective of M&A and governance structure.Further,this paper deeply examines the differences between the two in the implementation process of restricted stocks and stock options,and also examines the regulatory role of corporate governance structure factors such as executive shareholding,institutional shareholding and managerial power concentration.The structure of this paper is as follows: The first chapter is the introduction.Focus on the research background and significance,theoretical basis,research ideas and framework,research contribution of this paper and related concept explanation;The second chapter is a literature review.It mainly focuses on the review of relevant literatures on equity incentives and company performance,M&A behavior and equity incentives,as well as governance structure and equity incentives;The third chapter is research design.It mainly includes the research hypothesis,sample selection and data source,variable design and model construction;The fourth chapter is the empirical test.It mainly examines the adjustment effect of M&A on equity incentives and corporate performance,and the adjustment role of M&A under different equity incentive schemes.And finally,it examines the regulatory role of executive ownership,institutional ownership,and managerial rights.The fifth chapter is the countermeasures.Summarize the empirical results and give corresponding countermeasures and suggestions.The main conclusions of this paper are:(1)M&A behavior can promote the positive correlation between equity incentives and company performance.As the number of mergers and acquisitions increases,the relationship is inverted U-shaped curve.When the company's M&A activity is 1 time,the impact of equity incentives on company performance is at its best;(2)Under different equity incentives,the adjustment effect of M&A behavior is inconsistent.Under the restricted stock incentive plan,M&A behavior promotes the impact of equity incentives on company performance.Under the stock option incentive plan,M&A behavior inhibits the impact of equity incentives on company performance;(3)In terms of the impact of corporate governance structure,executives' holdings can promote the positive relationship between equity incentives and company performance,and the level of significance is the best when the number of M&A is one,executive stock holdings are significantly negatively correlated with company performance;institutional shareholding has a restraining effect,when the number of M&A is more than one,the level of significance is higher,at this time,institutional holdings are significantly positively correlated with company performance.