Analyst Following,Executive's Self-interest Behavior And Equity Incentive Effect

With the development of China's capital market,regulators pay more attention to the continuous supervision of listed companies and the implementation of the main responsibilities of intermediaries.As an important participant in the capital market and an important provider of financial information,whether the behavior of securities analysts,such as on-the-spot investigation and investment recommendation,can play an external governance effect has attracted much attention.But at present,the domestic research on analysts pay more attention to their behavior characteristics and the effect of stock recommendation,and the research on their governance effect is still in its infancy.Based on the close relationship between the design of equity incentive scheme and executives' self-interest behavior,this paper studies the external governance effect and effect of analysts' following on executives' self-interest behavior in equity incentive scheme design.Based on the hypothesis related to analyst governance effects and executive equity incentives,this paper constructs a research framework of analysts' following,executives' self-interest behavior in equity incentive scheme design,and equity incentive effect,and selects the listed companies in Shanghai and Shenzhen that implemented equity incentives from 2011 to 2015 as the research sample,uses the general least square method(OLS),order probit model and stepwise regression method to study the relationship among them.Firstly,this paper studies the impact of analyst following on equity incentive effect,,then discusses the relationship between analysts' following and executives' self-interest behavior in equity incentive scheme design,and finally reveals the intermediary mechanism and effect of executive self-interest behavior between analyst following and equity incentive effect.The results show that: First,analyst following is negatively correlated with equity incentive effect,that is,the higher the analyst following intensity is,the worse the equity incentive effect is.Second,analyst following will strengthen the self-interest behavior of executives in the design of equity incentive schemes.During the period of issuing the equity incentive plan,analysts tend to cooperate with executives to implement equity incentive.With the cooperation of analysts,the self-interest behavior of senior managers in the design of equity incentive scheme is more serious,and the welfare level of equity incentive scheme is significantly improved.Third,the self-interest behavior of executives in the design of equity incentive scheme plays an intermediary role between analyst following and equity incentive effect.In addition,this study also found that:(1)Executives achieve self-interest mainly by reducing the standard of equity incentive assessment index.(2)The greater the power of executives,the more obvious the self-interest behavior of executives in equity incentive.(3)Analysts' independence and institutional investors' ownership will have an impact on analysts' external governance.According to the conclusion of this study,this paper puts forward the following policy recommendations:(1)Improve the prevention mechanism of analysts' conflicts of interest and give full play to the role of analysts' reputation mechanism.(2)Establish an independent review committee to strengthen the review of equity incentive plan.(3)Strengthen the supervision of equity incentive of listed companies,and promote the supervision atmosphere of "dare not act in disorder".