Research On The Effect Of Equity Incentive Scheme Of Listed Companies In Medical Industry

With the overall progress of the reforms of non-tradable shares in 2005,Equity Incentive enters into a new development opportunity.As a long-term incentive system,equity incentive can help solve the principal-agent problem between the operator and the owner.What's more,considering that corporate interests is their shared goal,they can have greater incentive to promote stable development of company.With the improvement of relevant policies and regulations of equity incentive in China,equity incentive is becoming a normal incentive tool for the enterprises.With the low degree of increasing,the pharmaceutical industry is characterized by high investment,high risk and long cycle.In order to reduce the rate of brain drain and stabilize the excellent management team.Listed companies in the pharmaceutical industry have also come out with equity incentive plans.By the end of 2018,there were 216 A-share listed companies in the medical sector.136 equity incentive plans have been launched by 99 companies.As a typical technology-intensive industries,the pharmaceutical industry highly depend on brainpower.Talent can not be ignored the rapid development of pharmaceutical companies.The implementation of equity incentive can mobilize the enthusiasm and activity of employees and help attract and retain talent.This paper selects the company named Hengrui Medicine as the research object.The company has successfully implemented two periods of restricted stock incentive program,the third period is still in progress.Firstly,this paper summarizes relevant literature and theoretical basis of equity incentive,as well as analyzes the status of implementation of equity incentive implemented by listed companies in pharmaceutical industry.Then,this paper takes equity incentive program of Hengrui Medicine as the research object.Based on the comparative analysis and implementation motivation of equity incentive plans,firstly,the attitude of investors towards equity incentive plans of each period is analyzed with the method of event study.Then,the financial index method is used to analyze the changes of financial performance before and after the implementation of the equity incentive in vertical and horizontal.At the same time,it also analyzes the changes of the company's Eva before and after the implementation of equity incentive.Otherwise,this paper also considers the non-financial performance of equity incentive from three aspects: innovation ability,talent team construction and investment.Finally,this paper summarizes the results of the demonstration and puts forward related countermeasures and Suggestions.This article comes to the following conclusions based on the case analysis.The equity incentive effect is significant.Event study results show that market investors are optimistic about Equity Incentive Scheme of Hengrui Medicine.After the implementation of equity incentive,financial performance and economic value added have been improved.At the same time,equity incentive of Hengrui Medicine has a positive impact on the company's talent team building,innovative ability and investment behavior.According to the result,this paper makes the following recommendations: firstly,the establishment of exercise index should be combined with the particularity of pharmaceutical industry.In order to avoid selecting a single performance index,it is necessary to consider the indicators reflecting technological innovation capability of enterprises and improve the performance appraisal system.At the same time,increasing incentive intensity is helpful;secondly,we should improve the external and internal environment for listed companies to implement equity incentives,strictly control the quality of information disclosure,as well as improve the capital market environment.