Research On The Implementation Effects Of Stock Ownership Incentive In Shanghai Jahwa Corporation

Stock ownership incentive refers to a long-term incentive system which improves the separation of corporate ownership and management right in case of principal-agent problems.Together with the improvement of legal environment in China,Shanghai Jahwa Corporation follows the practice of numerous listed companies to implement stock ownership incentive plan as of 2008.As not every company that has implemented incentive plan may obtain considerable achievements,the research on the implementation effects of stock ownership incentive plan in Shanghai Jahwa Corporation has great significance.The paper takes the stock ownership incentive plan in Shanghai Jahwa Corporation as the case and primarily performs the research from the following aspects.Firstly,it states the implementation background,purpose and significance of stock ownership incentive,concludes existing studies and related theories about stock ownership incentive at home and abroad,clarifies the definition of property right nature,and observes the influence of property right nature on the efficiency of stock ownership incentive.Secondly,it observes the three stock ownership incentive plans implemented by Shanghai Jahwa Corporation and analyzes the motivation of its internal capital structure and stock ownership incentive plan.Thirdly,according to stock price volatility and excess returns variation of Shanghai Jahwa Corporation after the implementation of stock ownership incentive,it investigates market reaction.Subsequently,it measures corporate financial condition based on the variation of corporate profitability,business operation ability and debt paying ability,and explores the variation of corporate performance in combination with the variation of EVA value.Fourthly,it proposes pertinent suggestions to optimize the problems confronted by Shanghai Jahwa Corporation in stock ownership incentive implementation,including inadequate reserved stock,short period of validity,and non-standard performance assessment and capital structure.Pursuant to above analysis,the paper derives the following conclusions.Firstly,the stock ownership incentive plans of Shanghai Jahwa Corporation respectively in state-owned holding period and privateowned period are different in regulatory organization,incentive degree and performance evaluation indicator.In state-owned holding period,the company subject to more regulations can not achieve remarkable incentive effects.While in private-owned period,the company in a more loose environment achieves more remarkable incentive effects.Secondly,in face of intense industry competition,Shanghai Jahwa Corporation formulates a more rational stock ownership incentive plan by altering corporate property right nature.Throughout the comparative study on Shanghai Jahwa Corporation and advanced industry level,it can be clearly seen that under stock ownership incentive,the company has improved its profitability and debt paying ability and concurrent EVA value also promptly increases.It implies that the plan has effectively reinforced the mobility of the company and increased corporate earnings.Thirdly,owing to the variation of corporate property right nature and repeated implementation of stock ownership incentive plan,the structure of Board of Directors turns increasingly unstable.Therefore,corporate business operation ability also fluctuates without stability in general growth trend.