Analysis On The Effect Of Equity Incentive From The Perspective Of Life Cycle

Modern enterprise ownership and management separation,the resulting principal-agent conflict,relieve the contradictions of principal-agent,improve enterprise managers’ motivation is the key to the company improve the efficiency of governance.Equity incentive of the related literature research shows that the implementation of equity incentive can make enterprise management and the shareholders in the consistent interests to a certain extent,arouse the enthusiasm of the enterprise managers effect,reduce the agent cost,improve the management efficiency of enterprises.With the promulgation of Equity Incentive Measures for Listed Companies in China,as well as the revision of Company Law and Securities Law,the number of listed companies implementing equity incentive has increased year by year since 2006.The current data show that nearly 40% of listed companies in China have implemented equity incentive.Domestic and foreign scholars have too many dimensions of research on the effects of equity incentive,most of the research results indicate that the implementation of equity incentive enterprise to bring the positive influence,some scholars put forward the enterprise life cycle is one of the important factors influencing business decisions,equity incentive should also match the enterprise life cycle,on this basis,this paper studies the different life cycle of the implementation of equity incentive effects.This paper takes Lianhua Technology,a listed company that has implemented equity incentive for three times from 2011 to 2019,as a case,and analyzes the difference in the effect of equity incentive in different life cycles from the perspectives of market response,agency cost and business performance.From the perspective of market reaction,the results show that the equity incentive plan is considered positive by the market and has a positive effect in the short term,which is manifested in the short-term improvement of stock price.From the perspective of agency cost,the results show that the equity incentive implemented in the growth period can effectively reduce agency cost,but the equity incentive implemented in the maturity period has no obvious effect on reducing agency cost.From the perspective of business performance,this paper USES financial indicators analysis results show that the case of growth and maturation to implement equity incentive is to improve the operating performance of enterprises,but on case performance Angle is different,the influence of the case in developing the implementation of equity incentive in significantly improve the profitability of enterprises,the mature period the implementation of equity incentive to promote the further development of the enterprise,growth ability get promoted.Through case study,this paper is different to the life cycle of enterprises to provide reference for the implementation of equity incentive,the effect of the implementation of equity incentive for different life cycle the expectation,to help enterprises to make decisions.