The Research On The Impact Of Executive Equity Incentive On Enterprise Performance

With the development of market economy and the continuous improvement of modern enterprise system,the separation of ownership and management rights of enterprises has become normal.Owners own the ownership of the means of production of enterprises,managers have the decision-making power of enterprise management.Different rights lead to different orientations of interests,Due to the existence of information asymmetry,managers will have the motivation to make moral hazard behaviors that maximize private benefits but impair the value of enterprises.The inefficient investment phenomenon in Chinese enterprises is a reflection of managers' self-interest behavior.As an important source of value creation,investment activities inject fresh blood into the sustainable development of enterprises.which is the guarantee for the long-term stable development of enterprises.Non-efficient investment,whether over-investment or under-investment,is a waste of enterprise resources and a nibble on enterprise performance.Therefore,the emergence of equity incentive system is particularly important.China's equity incentive system began at the end of 2005,China Securities Regulatory Commission promulgated the "Management Measures of Equity Incentive for Listed Companies"(trial implementation).The successive promulgation of relevant policies in the following years accelerated the rise of the system,making the equity incentive system more and more valued by enterprises.As a long-term incentive mechanism,equity incentive can effectively alleviate the principal-agent problem,reduce the conflict of interests between managers and shareholders,form a community of interests,and promote managers to better govern enterprises with the attitude of masters.Whether equity incentive can effectively inhibit inefficient investment,improve the performance of enterprises,and whether it can indirectly improve the performance of enterprises by inhibiting inefficient investment need further verification.On the basis of sorting out and summarizing the domestic and foreign literatures on equity incentives,inefficient investment and corporate performance,puts forward four hypotheses and establishes a regression model based on relevant theories.This paper chooses 3972 sample data from Shanghai and Shenzhen A-share listings from 2012 to 2017 to make regression analysis on the model.Empirical results show that inefficient investment,especially under-investment,exists in Chinese enterprises widespreadly.Equity incentive can restrain inefficient investment;inefficient investment negatively affects enterprise performance;and through the path of "equity incentive-inefficient investment-enterprise performance",plays a part of the intermediary role.Finally,the conclusions are summarized and it puts forward some suggestions to improve the equity incentive system and design scheme,strengthen the monitoring of investment decision-making process and strengthen the internal governance of enterprises.