A Study On The Relationship Between Executive Equity Incentives,Excess Cash Holdings And Corporate Value

The principal-agent theory points out that due to the asymmetry of information and the imperfect contract,the ownership of the shareholder and the actual management rights of the top manager are separated to create the agent problem.The top manager is easy choose adverse and unethical behavior for private interests.The risk behavior damages the interests of the major shareholder and affects the long-term development of the enterprise.In order to effectively alleviate the agency problem between shareholders and managers,equity incentives came into being,and were regarded as a long-term incentive mechanism that can effectively solve the principal-agent problem.The ultimate goal of the company's implementation of the equity incentive plan is to enable the outstanding managers to obtain the economic rights granted by the company in the form of equity when contributing to the development of the company,so that the manager become one of the company's shareholders and link the business performance of the company to the future development prospects in the process of enterprise management.Through the equity incentive plan,the enterprise managers participate in the enterprise decision-making,share the benefits and take risks as the shareholders,so as to ensure that the managers fully committed to the management of the company and serve the future development of the company.This kind of incentive mechanism can unify the objectives of business owners and operators to a certain extent,avoid conflicts of interest between principals and agents,and help enterprises to achieve better business performance and maintain a good development.In the face of the manager's shareholding,the major shareholder with control power of the enterprise will supervise the manager,or will use its own control power to encroach on the interests of the minority shareholders.It is also a problem that academics and enterprises attach great importance to.Cash is the most liquid asset,and a certain amount of cash held by a company can satisfy its trading motives,preventive motives,and speculative motives.In recent years,the domestic and foreign companies have generally suffered from excessive cash holdings,which has attracted the attention of academic circles and enterprises.The existing research literature generally believes that the separation of the two powers leads most of the owners not directly involved in the company's management,the manager actually controls the company's daily business activities,and can easily encroach on cash.After the executives receive the equity incentives,they can give full play to the enthusiasm of the work,organically combine the personal interests with the corporate interests,alleviate the problem of the principal-agent,and have an impact on the level of excess cash holdings,which in turn affects the value of the enterprise.This paper combs and discusses the relevant domestic and international literature on executive equity incentives,excess cash holdings and corporate value,and the related theory of the influence of major shareholder control power on executive equity incentives.The 2008-2017 A-share listed companies were selected as research samples,and theoretical models were constructed.The statistical data of the statistical data was used to analyze the relationship between executives' equity incentives and corporate value,and the majority shareholder control power and excess cash holding were introduced to explore the regulatory role of corporate shareholder control power and the mediating role of excess cash holdings.Based on the empirical analysis of the model,the following conclusions are drawn: 1.The executive equity incentive has a significant positive impact on the value of the enterprise;2.The executive equity incentive has a significant negative impact on the level of excess cash holdings.3.The level of excess cash holdings has a significant negative impact on corporate value.4.The control power of the major shareholder strengthens the executive equity incentives in the level of excess cash holdings.5.Equity incentives for executives can enhance corporate value by reducing the intermediary role of excess cash holdings.