Study Of Equity Incentive&Enterprise Foreign Investment Rate

In recent years,China’s outward foreign direct investment(OFDI)has developed rapidly.As the end of 2019,the total OFDI reached 136.9 billion U.S.dollars,and the accumulated outward foreign non-financial direct investment was 2,198.8 billion U.S.dollars.With the enhancement of the enterprises international competitiveness,the development of international business operations has become an inevitable trend for the future development of enterprises.Studies have shown that,in addition to the condition of enterprises themselves,the senior management also has an important influence on the company’s OFDI.Analyzing the separation of ownership and management,the trend of personal interests of executives on the basis of Principal-agent Theory,Human Capital Theory,Motivation Theory,and Corporate Governance Theory,executives are likely to harm investors’ interests for protecting their own rights and interests,and thus impact OFDI.As one of the effective ways to alleviate principal-agent problem of the management,will equity incentives affect the company’s OFDI?This thesis will focus on exploring the relationship between equity incentives and the rate of OFDI.This thesis first introduces the current situation of China’s OFDI,combs the related literature from domestic and aboard on equity incentives and the rate of OFDI.On this basis,relevant research hypotheses were put forward and empirical tests were carried out.In order to explore the impact of equity incentives and the rate of corporate OFDI,this thesis selects non-financial listed companies in Shanghai and Shenzhen stock markets from 2010 to 2019 as a research sample,and constructs panel data for regression analysis.The research draws the conclusion that:(1)In general,the implementation of equity incentive policies has a significant role in promoting the company’s OFDI rate.And there is a positive correlation between the intensity of equity incentives and the rate of OFDI.(2)Compared with companies with relatively complete internal constraint mechanisms,the positive correlation between equity incentives and the rate of OFDI in enterprises with weaker internal constraints is less obvious.(3)Compared with state-owned listed companies,privately-owned listed companies have a stronger effect on the implementation of equity incentives and the rate of OFDI.(4)The characteristics of the executives of OFDI companies affect the rate of OFDI,and executives with overseas backgrounds are better able to control risks,which weakens the positive effects of equity incentives and the rate of OFDI to a certain extent.Further research shows that the executive equity incentives within private enterprises have a more obvious regulatory effect on accelerating the rate of OFDI.Whether it is a private enterprise or a state-owned enterprise,the internal constraint mechanism has a more significant role in regulating the rate of ODFI.In addition,this thesis also conducted a series of robustness tests to verify the reliability of the research conclusions,and the results remain unchanged basically.This article enriches the literature on the economic consequences of the implementation of equity incentive policies and the influencing factors of OFDI by combing the relevant theoretical literature and empirical research.Meanwhile,it also provides some reference for the formulation of China’s equity incentive plan and the way to improve the effectiveness of the investment rate of OFDI enterprises.It is of great significance for enterprises to improve the practice of related incentive mechanisms and to attach importance to risky project investment.