Research On The Implementation Effect Of Equity Incentive In Fuanna Company Based On DEA Model

Many listed companies solve the principal-agent problem through equity incentive,and expect to improve the cohesion of the staff team through such incentive mechanism,promote the staff to work hard and improve the operating efficiency of the enterprise.With the gradual maturity of equity incentive theory and the development and expansion of domestic listed companies,more and more enterprises choose to implement equity incentive plan to improve corporate benefits.Whether the implementation of equity incentive can effectively promote the financial performance of listed companies to achieve the goal of incentive is worth exploring.Shenzhen Fuanna Bedding and Furnishing Co.,Ltd.,a privately owned listed home textile company,ranks among the top three in the industry and has implemented 7 equity incentive plans since 2011.This paper chooses the company as a case enterprise to study,analyzes whether the implementation of the 7-period equity incentive plan has an impact on the short-term market response and medium-and long-term financial performance of the company,and expects the study of the case enterprise to provide reference for other listed home textile enterprises.The first chapter introduces the background of case enterprise research.Chapter two elaborates the meaning,types and related theories of equity incentive;Chapter three lists and states the equity incentive plan of the case enterprise phase by phase;The fourth chapter uses the event study method to collect and organize the data of each equity incentive plan window period,calculates the excess return(AR)and cumulative excess return(CAR)in the window period,and then determines whether the implementation of the seven-period equity incentive plan has an impact on the short-term performance of the company.In chapter 5,data envelopment analysis(DEA)is used to evaluate whether the implementation of multi-term equity incentive plan has a positive effect on the long-term financial performance of enterprises.Using data envelopment analysis method to select the appropriate DEA model,select the case enterprise’s debt paying ability,operating ability,profitability and development ability of four aspects of financial index data,debt paying ability and operating ability indicators as input indicators,profitability and development ability indicators as output indicators.Debt-paying ability indicators include asset-liability ratio,quick ratio and cash ratio.Operating capacity indicators select inventory turnover,receivables turnover,fixed assets turnover;Profitability indicators include operating profit rate,total operating cost rate and return on equity.The index of development capacity is capital preservation and appreciation rate,operating income growth rate and net profit growth rate.The factor analysis method is used to extract 12 financial indicators into 4 common factors,which respectively represent the financial level of fuanna Company in four aspects.The score data of four comprehensive factors are calculated and the final score is obtained after dimensionless processing.The software DEAP2.1 is used to run the final score data,and the results of the evaluation indicators are obtained.Then judge whether the implementation of multi-term equity incentive plan can promote the enterprise’s mid-and long-term financial performance.The conclusion of this paper is as follows: except for the Restricted stock in 2014 and2018,the market reaction in the other periods is not very optimistic,and the stock market has not paid much attention to it,the improvement of short-term performance of enterprises is not obvious.For the medium and long-term financial performance of enterprises,5 years of financial data in DEA model reach the fully effective results,while the financial index values in 2016 and 2019 can be regarded as close to effective.In 2011,2017 and 2018,the financial ability of the company is in good condition.In the three-period years,the DEA has reached the full effective state,but in 2016 it can be judged to be close to effective.Generally speaking,the implementation of the equity incentive plan can improve the financial level of the company to a certain extent and enhance the core competitiveness of the case enterprises,which is worthy of reference for other enterprises in the industry.