Research On The Implementation Motivation And Incentive Effect Of The State-Owned Enterprise Equity Incentive Plan

The report of the 20 th CPC National Congress proposes the stateowned enterprises needs to be deepen reformed to become stronger,better and bigger.The report stressed that we must insist that science and technology is the primary productive force,talent is the first resource,and innovation is the first driving force.Equity incentive as a medium and long-term incentive tool for enterprises can improve corporate governance,promote the scientific and technological level of enterprise by motivate enterprise talents and the enthusiasm of innovation,so equity incentive can promote enterprise to become stronger,better and bigger by these ways.This paper takes the implementation of equity incentive in state-owned enterprise China Zhenhua Science & Technology(Zhenhua)as a case study and research why do enterprises implement equity incentive,how does equity incentive affect the value of enterprise and what is the effect of equity incentive.This paper gives some advice for the followup science and technology state-owned enterprises which will implement of equity incentive.At first,this paper analyzes the research background and significance,and confirms the research direction and objectives.This paper constructs the action mechanism of equity incentive on enterprise value through the combination of the basic theories of equity incentive such as principal-agent theory,human capital theory,stakeholder theory and enterprise incentive theory with the domestic and international existing relevant literature.Secondly,this paper takes the equity incentive of Zhenhua as a case study,combined with the company situation,industry background and national policy of Zhenhua to analyze the specific motivation of the equity incentive of Zhenhua.Indepth study of the specific impact of the three mechanisms on the value of Zhenhua enterprises,such as improving corporate governance,attracting and retaining talents,and stimulating the enthusiasm of enterprise innovation.Finally,financial performance indicators and short-term event research methods are used to comprehensively evaluate the incentive effect of equity incentive implemented by Zhenhua.This paper finds that Zhenhua implements equity incentive because of the push of national policy and industry factors,and also because of the company’s vision of reducing principal-agent costs,upgrading human capital structure and improving core competitiveness.Through the in-depth analysis of the construction of intermediary indicators for the implementation of equity incentives in Zhenhua,it is found that equity incentives can improve enterprise value through the following three mechanisms:first,improve corporate governance and improve business performance;second,attract and retain talents.advanced human capital structure;third,stimulate innovation enthusiasm and improve core competitiveness.At the same time,combined with the analysis of financial performance indicators and short-term event research method,this paper finds that the effect of equity incentive of Zhenhua is positive.On the one hand,through vertical comparison of the value of financial performance indicators before and after the implementation of equity incentive of Zhenhua,combined with horizontal comparison of the average value of various financial performance indicators in the industry,it is found that the implementation of equity incentive of Zhenhua has improved its profitability,debt paying ability,operation ability and development ability.On the other hand,through the analysis of the market response,it is found that Zhenhua’s implementation of equity incentive market response is positive,and the market is optimistic about Zhenhua’s implementation of equity incentive.Finally,this paper summarizes the experience and shortcomings of Zhenhua in implementing equity incentive,and believes that Zhenhua reasonably sets the incentive object,incentive model and incentive validity period according to its own situation when designing the equity incentive scheme,but at the same time,there are problems such as insufficient incentive scale and slightly loose exercise conditions.According to these experience and shortcomings,this paper puts forward the following suggestions: first,the incentive object and incentive scale should be dynamically adjusted when designing equity incentive scheme;second,enterprises should choose incentive mode and incentive validity period according to their own actual situation;third: when setting equity incentive assessment targets,enterprises should construct the corresponding index system according to the purpose of implementation.It is expected to play a certain role for reference to the further development of equity incentive of science and technology state-owned enterprises.