Research On The Effect Between Equity Incentive And Company Performance

The separation of enterprise ownership and management control has led to the problem of principal-agent.The implementation of equity incentives can integrate the management with shareholders by granting stock ownership to executives,inspiring the managements to work hard and minimizing the cost of the principal-agent problem,so it is favored at home and abroad.prior to 2006,equity incentives were more slowly promoted because of a unique market economy in China.With the "Measures for the Administration of Equity Incentives of Listed Companies" and the "Trial Measures for the Implementation of Equity Incentives by State-Owned Listed Companies",equity incentives have become one of the main ways for listed companies to retain talents and encourage executives to develop and innovate by granting listed companies with equity incentives.but at the same time,whether the use of equity incentives can really promote the better development of enterprises is a economic mystery.So it is necessary to conduct a series of studies.This paper traces the history from the past,summarizes the relevant research results of domestic and foreign equity incentives,mainly including the financial theory foundation,domestic and international research conclusions and then compares similarities and differences between the results.The first part of this paper explores the impact of the information on the capital market price of the company's equity incentive plan through the event-driven model at the capital market level.The empirical results prove that capital market investors have given a positive responses to the equity plan,and from the perspective of corporate attributes,capital market investors are generally more optimistic about state-owned enterprises to implement equity incentives.Second paper explores the impact of equity incentives on company performance.We found that the implementation of equity incentives can bring a certain degree of improvement to future ROE and ROA,but the impact on revenue growth is not significant.From the perspective of corporate attributes,the effect of implementing equity incentives in state-owned enterprises is significantly higher than that of private enterprises.The last part of this paper is based on the above research results,combined with the current construction process of China's capital market and the environment of state-owned enterprise reform,and gives some suggestions.