Research On Opportunity Timing In Equity Incentives

Since its first use in the United States in the 1950 s,equity incentives have gradually become the most widely used incentive mechanism in modern corporate systems.The prototype of equity incentives in China can be traced back to the 1980 s.Nowadays,a large number of listed companies try to ease the principal-agent problem brought about by the separation of the two powers of the company-based enterprises by implementing equity incentives.Correspondingly,equity incentive income has also become an important source of company management's revenue.At the same time,some scholars have found that the equity incentive plan implemented by listed companies in China has not exerted the ideal incentive effect.Some equity incentive plans are accompanied by various timing choices in the process of design and implementation.This paper firstly combs the relevant basic theories such as rational economic man hypothesis,principal-agent theory,information asymmetry theory and management power theory in the field of equity incentive and opportunistic timing research.Then,the paper analyzes the motivation,realization conditions and performance mode of the opportunistic timing behavior of the listed company's management in the equity incentive.The analysis finds that the company's management is motivated by the exercise conditions required by the equity incentive plan to maximize its equity incentive income.In the case that the internal management power of the company is relatively large and the external supervision is not strict enough,it is possible to adopt opportunistic timing behaviors such as selection of key time points,selective disclosure of key information,and opportunity-based earnings management.Finally,it sorts out the institutional background and current situation of equity incentives for listed companies in China,and provides support for the subsequent chapters of the paper.On this basis,the article takes China's listed company Dr.Peng as a case to analyze the opportunistic timing behavior of its management in equity incentives.This paper starts with the introduction of Dr.Peng and its equity incentive plan.Through the use of Event Study to analyze the characteristics of cumulative abnormal return before and after the announcement date of the equity incentive draft,it is judged that Dr.Peng has a timing choice behavior when launching the equity incentive plan.The article analysis finds that Dr.Peng's management implemented the following opportunistic timing behavior: choose to launch the equity incentive plan after the company has just completed major asset restructuring;choose to disclose the revised draft of the equity incentive draft;disclose the earnings information at the right time to create surplus management Conditions;choose the opportunity to manage earnings,and reduce the difficulty of exercise in disguise.This paper analyzes the actual conditions of Dr.Peng's opportunistic timing behavior from the perspective of the company's internal governance.It is found that Dr.Peng's shareholding structure is too scattered,and the actual controllers are not willing to participate in corporate governance for stock pledge.The board of directors is relatively lacking in independence.This paper analyzes the executive gains of the management as the incentive object,and studies the performance changes of Dr.Peng in the whole process of equity incentive implementation to analyze the economic consequences of the opportunistic timing behavior.The study finds that Dr.Peng's management obtaines a large amount of equity incentive income,without bringing substantial improvement to the company's performance after the completion of the incentive plan.Finally,this paper puts some suggestions on optimizing the design of equity incentive scheme,improving the internal governance of the company and constructing the external environment that guarantees the good operation of the equity incentive plan,in order to avoid the above opportunistic timing behavior in the process of implementing equity incentives for listed companies.