A Case Study On The Impact Of Restricted Stock Incentive On The Corporate Performance Of China State Construction Engineering Co.,Ltd.

As a long-term incentive mechanism,equity incentives are used by more and more companies to coordinate the interests of operators and owners,mobilize their enthusiasm for work and make them focus on the long-term interests of the enterprises.Compared with the international market,the implementation of equity incentives in China started later.It was only after the publication of a series of relevant regulatory documents such as the "Measures for the Administration of Equity Incentives of Listed Companies(Trial)" after 2006 that marked the implementation of equity incentives by listed companies with the real institutional guarantee,the equity incentives of China’s listed companies have since entered a stage of rapid development.At present,compared with the total number of equity incentive plans announced by A-share listed companies,the number of equity incentive plans launched by state-owned enterprises is obviously insufficient,significantly lower than the number of equity incentive plans issued by private enterprises.This is because the state has formulated stricter audit procedures and related regulations on the implementation of equity incentives for state-owned listed companies,thereby avoiding the loss of state-owned assets,After 2015,with the continuous advancement of the mixed-ownership reform of state-owned enterprises,more and more state-owned enterprises have launched and implemented equity incentive plans.The construction industry is an important pillar industry of China’s national economy and has played an indelibly important role in China’s modern economic construction.As a pioneer of equity incentives for China’s state-owned construction enterprises,China State Construction Engineering Co.,Ltd.(hereinafter referred to as"CSCEC")announced its first draft of a restricted stock incentive plan in 2011,which was officially approved for implementation in 2013.In 2016 and 2018,its second and third restricted stock incentive plans were successively implemented.It is one of the few companies in China that has successfully implemented three phases of equity incentives plans.At present,whether it is from the perspective of China’s construction industry as a whole or from the perspective of state-owned construction enterprises,the number of construction companies implementing equity incentives is obviously insufficient compared to the overall A-share listed companies.The research on the implementation effect of CSCEC’s three-phase restricted stock incentive plans has a strong research value,and can provide a certain reference direction for China’s state-owned construction enterprises,other non-state-owned construction enterprises,and even state-owned enterprises in other industries to carry out equity incentives in the future.This article takes CSCEC as an example to study the performance impact of implementing the three-phase restricted stock incentive plans.Firstly,the article reviews the previous literature on the research about the impact of equity incentive performance and the applicability of restricted stocks,and explains the theoretical basis and related concepts involved in this article.Then,it introduces the basic situation of CSCEC,the current status of the equity incentives of China’s construction industry,and the background where the CSCEC implemented its restricted stock incentive plans,explains the specific content and implementation of its restricted stock incentive plans,outlines the elements of three restricted stock incentive plans and make a comparative analysis between the elements of three restricted stock incentive plans.Afterwards,this article makes an in-depth analysis and evaluation of the performance impact of CSCEC’s implementation of restricted stock incentive plans in terms of short-term market response,long-term operating performance,and long-term shareholder wealth effect.Short-term market response analysis,mainly by using the event study method to analyze the market response degree of the announcement of CSCEC’s restricted stock incentive plans,finds that during the event window period of CSCEC’s three-phase restricted stock incentive plan announcement,the cumulative abnormal return of the company A-share stock presents a significant positive value,and there is a short-term shareholder wealth effect,reflecting that the market is optimistic about the implementation of CSCEC’s three-phase restricted stock incentive plan.In terms of long-term operating performance analysis,it mainly uses factor analysis and index analysis to analyze whether CSCEC’s operating performance during the implementation of restricted stock incentive plans has improved.Through the methods above,it can be concluded that the implementation of CSCEC’s restricted stock incentive plans has a positive effect on stabilizing the sustainable profitability and development capacity of the company,and is conducive to reducing the negative impacts from the whole industry on the company’s sustainable profitability and development capacity.The conclusion that the comprehensive operating performance level of CSCEC has changed significantly after the implementation of its restricted stock incentive plans cannot be verified whether CSCEC’s restricted stock incentives have a positive impact on the company’s overall operating performance level.In terms of the long-term shareholder wealth effect,the economic value-added method is used to analyze the changes in the long-term economic value of the enterprise during the implementation of restricted stock incentive plans in order to measure the impact of the implementation of CSCEC’s restricted stock incentives on the long-term shareholder wealth.Finally,this article summarizes the advantages and disadvantages of the design of CSCEC’s restricted stock incentive plans,and puts forward optimization recommendations such as setting more stringent performance evaluation target values and establishing an enterprise’s comprehensive operating performance evaluation index system,with a view to provide some reference opinions and a certain reference direction for the design and implementation of the equity incentive plan of CSCEC and other state-owned construction enterprises in the future.