Research On The Equity Incentive Effect Of Listed Companies In The Pharmaceutical Industry

Since the beginning of the 21 st century,China has issued a series of regulations for the implementation of equity incentives mechanism in listed companies,and then a lot of China's listed companies begin to use equity incentives mechanism to encourage the company's management to work hard.Especially the promulgation of “Listed Companies' Equity Incentive Measures” in 2016 has provided a more complete institutional environment to support the implementation of equity incentives mechanism.However,the equity incentives mechanism originated in the United States,which brought a large positive impact on American companies and also promoted the economic development of the United States at that time.However,while people think of equity incentives mechanism as the “golden handcuffs” of the company's management,the financial scandals of a number of well-known companies such as Enron broke people's worship of equity incentives mechanism.People began to think about whether equity incentives are the "golden key" increasing corporate value and shareholder wealth.Therefore,in the domestic environment where equity incentives are booming and the stock market is sluggish,it needs to further explore whether equity incentives mechanism can play an positive role in listed companies.I select Kunming Pharmaceutical Group,a listed company in the pharmaceutical industry for case study.First,because the pharmaceutical industry is high-tech industry and needs strong human resources to support it,it can be analyzed whether equity incentives can retain talents and can motivate talents to play a positive role in promoting the company's development.Second,because Kunming Pharmaceutical Group has implemented four equity incentive plans since 2009,there is sufficient data to support it.Third,Kunming Pharmaceutical Group listed in A-shares in 2000,and can analyze the implementation effect of equity incentives by implementing the market reaction of equity incentive plan.Therefore,this paper analyzes the effect of equity incentives of Kunming Pharmaceutical Group.Based on the basic theory of equity incentives and the related literatures at home and abroad,this paper first introduces the background of Kunming Pharmaceutical Group.Secondly,it introduces the specific content of the four equity incentive schemes of Kunming Pharmaceutical Group,compares and analyzes the four equity incentive schemes,and finds changes in the scheme.Then it analyzes the financial performance and market reaction of the implementation of equity incentives by Kunming Pharmaceutical Group.For financial performance,this paper examines whether the efforts made by management have improved the company's performance from the financial indicators of the company's performance.For the market reaction,this paper analyzes the change of the monthly closing price of Kunming Pharmaceutical Group stocks since 2010 and the market reaction after the announcement of the equity incentive announcement by using event study to analyze whether the equity incentives can bring the value of Kunming Pharmaceutical Group.Finally,through the analysis of the effect of the implementation of the equity incentive plan of Kunming Pharmaceutical Group,it is concluded that the 2010-2012 and 2013-2015 equity incentive plans of Kunming Pharmaceutical Group promoted the company's value enhancement,but the 2013-2015 plan later and 2016 equity incentive plan also did not have a positive effect on the company's performance.Therefore,the implementation of equity incentives by listed companies needs to consider whether the internal and external environmental conditions of the enterprise are suitable for implementing equity incentives,and it is necessary to consider the effective design of every element of the equity incentive scheme.