Research On The Impact Of Equity Incentive On The Total Factor Productivity Of Enterprises

Equity incentive as a long-term incentive method for executives can theoretically alleviate conflicts of interest between executives and shareholders,reduce commissionagent costs,and help executives increase investment in innovation,improve investment efficiency and corporate human capital accumulation,which in turn promotes the improvement of the enterprises total factor productivity.However,due to the late implementation of the equity incentive system in China,the related systems are not yet perfect,which has led to short-term opportunistic behavior of executives,such as whitewashing financial statements for earnings management and setting too low exercise prices to convert equity incentives into got his own “gold watch”.Whether equity incentives are reduced to a means for executives to seek rent or to effectively motivate executives to improve corporate performance is still worth exploring.This article re-examines the direct effects of equity incentives from a new perspective of whether it is conducive to improving corporate total factor productivity.Firstly,based on the related theories such as principal-agent theory and human capital theory,combined with scholars research on the indirect effects of equity incentives,this article constructed “equity incentives-innovation behavior-total factor productivity”,“equity incentives-investment efficiency-total factor productivity” and “equity incentiveshuman capital-total factor productivity ” transmission path,theoretically expounds the impact of equity incentives and their contract terms on the total factor productivity of enterprises,and then uses the ACF method and LP method to measure the total factor productivity of listed companies.Finally,after obtaining matching samples by using the propensity score matching method(PSM)that can effectively overcome the bias of sample selection,the effect of equity incentives on the total factor productivity of the enterprise was empirically tested through multiple linear regression,and further tested the impact of equity incentive contract terms on equity incentive effects.The research finds that:(1)the implementation of the equity incentive plan has a significant effect on improving the total factor productivity of the enterprise;(2)the reasonable choice of the equity incentive contract terms is the key to exert the equity incentive effect.Compared with restricted stocks,stock options have a better effect on improving the total factor productivity of the enterprise;compared with granting a small number of equity incentives,granting a larger number of equity incentives has a better effect on the enterprises total factor productivity.Replace TFP?ACF with TFP?LP for robustness test,the conclusions of this article still hold.