An Study On The Impact Of Equity Incentive On Cash Holding Level And Value

In August 2019,Yili shares issued an equity incentive plan,granting 183 million shares of the company’s core management backbone restrictive stocks,which caused heated discussions.There is no doubt that equity incentives,as a compensation mechanism for corporate governance,play an important role in the management and development of companies.After years of development,equity incentives have become more and more mature in the Chinese market,and their influence on the company’s behavior is increasing.Especially for the company’s management as the main incentive object,the management is responsible for the company’s daily operations and decision-making.Policy is an important one.As the most liquid asset of listed companies,cash has an important impact on the company’s survival and development.The company’s cash holding behavior is not only related to production and operation,but also determines whether the company can seize investment opportunities in time and obtain investment income.However,due to the separation of ownership and control of modern companies,the emergence of agency problems between shareholders and management often makes cash become a tool for company management to pursue private interests,and it cannot serve to maximize the value of the company.Therefore,how to make the company’s cash holding behavior more rational and scientific,so that it serves the company’s value increase has been discussed a lot.As a governance mechanism of the company,equity incentives will affect the company’s cash holding behavior and the economic consequences.The current research conclusions are still divided.Based on this,this paper studies the impact of equity incentives on the company’s cash holding level and value in a comprehensive framework.At the same time,it explores whether there is a difference in the relationship between the two under different governance environments and the internal mechanism of action.And put forward relevant policy suggestions.The research object of this paper is China’s A-share listed companies from 2004 to 2018,using PSM-DID model for regression analysis to test the impact of equity incentives on the company’s cash holding level and value.The results show that the implementation of equity incentives can alleviate the agency problem of the company and exert a positive governance effect.The specific conclusions include the following:(1)The implementation of equity incentives by listed companies can play a positive governance role,reduce the level of cash holdings,and enhance the value of cashholdings;(2)In non-state listed companies,equity incentives and cash holdings The negative correlation between the level and the positive correlation with the value of cash holdings is more significant;(3)In companies with high levels of analyst attention,the negative correlation between equity incentives and the level of cash holdings and the positive correlation with the value of cash holdings The correlation is more significant;(4)Equity incentives increase the value of cash holdings by improving the company’s investment efficiency.This article puts forward relevant suggestions on the basis of the above conclusions:(1)The formulation and implementation of the equity incentive plan should follow the long-term guiding principle,integrate all factors to design a reasonable and scientific equity incentive plan,and actively support and guide the company to adopt the equity incentive plan;(2)To continuously improve the company’s governance level,continue to improve the company’s governance system through the implementation of equity incentives and other governance mechanisms and the board of directors and other governance institutions,to promote the reform of property rights system and the improvement of external governance environment such as analysts;(3)the company’s investment Activities are related to the company’s survival and development,and affect the company’s value.Therefore,it should be more scientific and reasonable when formulating investment activities.Various stakeholders can also understand the company’s operating status through the company’s investment activities and make more scientific decisions.