Research On Equity Incentives,Inefficient Investment And Cash Dividend Smoothing

Since the share-trading reform in 2005,the equity incentives of listed companies in China have entered a new historical period,and the management measures promulgated by the CSRC have been finalized after ten years of trials.In the past ten years,the state has continuously increased the level,continuity and mandatory requirements for cash dividends.After the share reform,the equity incentive preference of listed companies has shifted from options to restricted stocks,to explore the reasons for the preference transfer and the real effect of the implementation of the two types of equity incentives,combined with the small and medium shareholders’ claims for cash dividends and the call of national policies.The empirical analysis of the relationship between the two equity incentives and dividend policy from the perspective of investment efficiency.Based on the theory of dividend signal theory and agency conflict,this paper measures the stability of cash dividend policy by free model nonparametric method,calculates the non-efficiency investment level of enterprise by Richardson model and quartile method,and analyzes the path by Wen Zhonglin’s hierarchical regression method.In the Shanghai and Shenzhen Stock Exchanges,which implemented equity incentives in 2006-2016 and have been in the market for more than three years,they studied the relationship between the two types of equity incentives and the level of dividends,stability and non-efficiency investment.First,option incentives are positively correlated with low levels of high stability dividends,and restricted stock incentives are positively correlated with high levels of high stability dividends.Although the high dividends under the restrictive stock guidance have certain rent-seeking motives,they are in line with the interests of small and medium-sized shareholders,and the restrictive stocks have a stronger stabilizing effect on dividend policy than option incentives.Second,option incentives increase the risk-taking ability of executives,but lack effective restraint mechanisms,so option incentives are positively correlated with corporate inefficient investment levels.Restricted stock incentives have strong restraint on senior executives and have a greater impact on the direct interests of executives.Such incentives have a certain mitigation effect on inefficient investment.Third,non-efficiency investment has increased the volatility of corporate cash flow,speeding up the adjustment of cash dividends,and ultimately leading to a reduction in the stability of cash dividend policy.Fourth,non-efficiency investment plays a concealing role in the impact of option incentives on dividend stability,and plays a mediating role in the impact of restricted stock incentives on dividend stability.Specifically,non-efficiency investment partially obscures the dividend smoothing effect of option incentives,and the masking effect accounts for 13%of the total effect;non-efficiency investment is the partial intermediary of restrictive stock incentives to promote dividend smoothing behavior,and the mediating effect accounts for the total effect 28.5%.Based on the above conclusions,the following countermeasures are proposed in terms of the design,effect evaluation and supervision of corporate investment efficiency of listed companies:The design of equity incentive schemes for listed companies should be different from person to person,and different types of incentives should be implemented for managers with different characteristics.Multiple incentives can be used in parallel to reduce the rent-seeking space and increase the estimated income estimation.A small number of stages are awarded in stages,and the contract period is appropriately extended.The evaluation of equity incentive effect should be combined with "soft" and "hard"indicators,"soft indicators" should design the overall culture and working atmosphere of the enterprise.The "hard indicators" should adopt indicators similar to cash dividends that cannot be whitewashed.In addition,performance-related assessment indicators are indispensable,but it is necessary to strengthen the constraints on earnings management and reporting.Establish and improve the supervision system of enterprise investment efficiency.First of all,investment decisions require professional teams to conduct detailed investigations,scientific analysis,and establish an investment responsibility system before investment.Secondly,after the investment is implemented,real-time monitoring and dynamic adjustment should be carried out according to the degree of importance.Finally,the company’s investment decisions should be combined with long-term and short-term,diversified as a guide to reduce the risk level to protect the owner’s rights.