Research On The Impact Of Equity Incentive On Market Value Management Performance

In recent years,there is more competition in China’s capital market,and it has become more significant for listed companies to manage their market value effectively.Equity incentive is usually used to manage market value.However,there are still controversies and explorations in the academic circles about what impact the use of equity incentives can bring to the performance of market value management,and how the impact path is.Firstly,this paper sorts out the literature on equity incentive,market value management performance and their correlation,and finds that equity incentive can affect the company’s operating performance,market reaction and stakeholder behavior,and then affect the value creation,value realization and market value premium factors respectively,but does not affect the value relevance.On this basis,this paper builds a theoretical analysis framework after considering principal-agent theory,signal transmission theory and reputation mechanism theory,according to the market value management performance measurement system that is created by China Center for Market Value Management.Then,this paper analyzes the two equity incentive schemes issued by LONGi from 2012 to 2020.Firstly,it visually shows the changes of the ranking and scores of four first-level indicators of market value management performance before and after equity incentive after considering all A-share listed companies,and finds that equity incentive can improve value creation ability,value realization ability and premium ability,but doesn’t directly impact on value relevance.Then,according to the theoretical analysis framework,it concretely shows the impact mechanism of equity incentive on market value management performance.Through research,this paper thinks that there are three ways for equity incentive to affect market value management performance as follows: First,based on principal-agent theory,equity incentive can reduce agency costs and enhance the company’s value creation ability,thus improving market value management performance.Secondly,based on the signal transmission theory,equity incentive releases good news to improve the company’s value realization ability,and then have better the market value management performance.Thirdly,based on the reputation mechanism theory,equity incentive improves the reputation of the company and managers,and then gains market premium,thus improving the market value management performance.Finally,based on the analysis of the influence path,this paper puts forward three inspirations for improving the market value management performance by using equity incentives,including using equity incentives to reduce agency costs,releasing good news,exerting reputation value.By analyzing the three paths about how equity incentive influences market value management performance,this paper finds the regularity behind the management phenomenon and expands the research about how equity incentive affect market value management performance.At the same time,it can provide a reference for other listed companies to significantly improve their market value management performance and achieve long-term stable value-added effect by using equity incentive,which is helpful to improve the market value management level of listed companies in China.