Analysis On The Implementation Effect Of Equity Incentives For Companies In Information Technology Service Industry

The separation of the two rights in modern companies has led to the problem of agency,and the design of equity incentive can alleviate this problem.Managers acquire equity in the company,allowing them to participate as shareholders in the company’s decision-making,share the company’s profits,and undertake the corresponding risks.The scope of equity incentive generally covers the company’s middle and senior management and core staff.This group of people will have a significant influence on the company’s performance.Equity incentive,as a long-term incentive,with the company’s wages and bonuses all belong to the compensation and welfare system.In recent years,more and more companies have begun to implement equity incentives.The relevant laws on equity incentives are constantly being improved.How to design the equity incentive scheme and whether the equity incentive is effective are all problems.First,this paper introduces the research background and the significance of the paper,explains the research methods of the paper and gives a general summary of the content.This paper summarizes the current views of domestic and foreign scholars on the theories,motivations,and implementations of equity incentive.And then,this paper introduces the concepts of equity incentive and introduces the theories of equity incentive and the status of information technology service industry.Second,the paper chooses the representative enterprise of information technology service—— Yonyou,introduce its company,especially its Implementation Plan of five equity incentives.And then analyze its motivation of implementing equity incentive.After analyzing of its effect from financial,market response,EVA synthesis and non-financial,we found that from the perspective of financial performance,the company’s implementation of equity incentives will promote the company’s profitability,operating capacity and growth capabilities,but there is no significant change in solvency.The stock market is optimistic about the company’s implementation of equity incentives,and believes that the implementation of equity incentives will have a positive impact on the company.From EVA perspective,the implementation of equity incentives will increase the wealth of shareholders,which is benefit to the company.From the non-financial point of view,the company’s implementation of equity incentives can improve the corporate governance structure,retain and attract talents,and increase R&D efforts.In all,the company’s five equity incentives havea significant effect on itself and have achieved its original purposes.But we also found that the company’s equity incentive program has shortcomings.Finally,we come up with corresponding suggestions and some inspirations to other companies in China about implement equity incentive,hoping to have a certain reference to the information technology service industry and National Equities Exchange & Quotations companies.