Equity Incentive Plan Of Listed Companies Research On Long Term Stock Price Effect

The equity incentive system was born in 1952 and launched by the United States Feizel Company.The original intention of the equity incentive system is to solve the principal-agent problem that is common in enterprise management.This agency conflict stems from the separation of ownership and management rights.Western developed countries(represented by the United States)have implemented equity incentives significantly earlier than China,and have achieved good results from the implementation effect.Compared with the western developed countries,China’s equity incentive began relatively late.It was only in the 1980 s that it began to be implemented.At the beginning,the equity incentive plan was not standardized.In 2006,the CSRC issued the Administrative Measures for Equity Incentive of Listed Companies(for Trial Implementation),which regulated and restricted the formulation of equity incentive schemes,providing policy support for the implementation of equity incentive by listed companies in China and promoting the rapid development of equity incentive system.After the exploration stage of equity incentive in 2006-2009,equity incentive has developed rapidly in China.With the slowdown of economic growth,listed companies need to find another way to improve performance,and equity incentive has become a better choice.Due to the small number of equity incentive samples implemented in China before2010 and many irregularities,the previous empirical research of domestic scholars lacks a large sample data base.After 2010,the number of samples of equity incentives implemented by listed companies increased sharply,providing sufficient data support for the study of equity incentive effects.Based on the existing research,this paper evaluates the implementation effect of equity incentive from the perspective of long-term stock price effect,and combines empirical analysis and case analysis to more thoroughly observe the impact of the formulation of equity incentive plan on its effect.This paper first explains the concept of equity incentive and long-term stock price effect,and introduces the relevant elements of equity incentive,including the subject matter of equity incentive,incentive validity,incentive object,etc.Next,it combs the theories needed in the article,mainly including principal-agent theory,signal transmission theory and human capital theory.The development of these theories has promoted the generation and improvement of equity incentive system.After that,this paper combed the domestic and foreign literature on the implementation effect of equity incentive,and carried out from the two aspects of equity incentive to performance and equity incentive to stock price,and found that the current academic evaluation of the implementation effect of equity incentive has not reached an agreement.In the empirical part,this paper uses the equity incentive data of China’s Shanghai and Shenzhen A-share listed companies from 2010 to 2018 to study the impact of equity incentive on the stock price within three years after the implementation of China’s equity incentive.Select 1117 equity incentive plans of enterprises that have successfully implemented equity incentive,use the event study method,take the monthly return of the CSI 300 Index as the benchmark,calculate the excess return of buying and holding within three years after the implementation of equity incentive,use the single sample t-test and chart comparison,compare and analyze the changes of long-term stock price after the implementation of equity incentive,and use the propensity score matching to solve the problem of sample self-selection.The research results show that after the implementation of the equity incentive plan of listed companies,it has a significant effect on the stock price in three years,and the excess return on buying and holding has an upward trend in three years,indicating that the implementation of equity incentive has a positive effect on the long-term stock price.The positive effect of stock option incentive plan on stock price is better than that of restricted stock;The positive effect of the equity incentive plan with an incentive period of more than five years on the stock price is better than that with a limited period of time;The higher the proportion of core technicians in the incentive objects,the better the long-term stock price effect.The intermediary effect model is used to verify the transmission path of "equity incentive-R&D investment-excess return",which shows that enterprises increase R&D after implementing equity incentive,and promote the long-term excess return of the company’s stock to be positive.Further,expand the research window to five years,and find that the excess earnings of enterprises implementing equity incentives are still positive,showing a gradual upward trend.On the basis of empirical research,this paper selects the case of equity incentive of Hengrui Pharmaceutical Co.,Ltd.,and observes the process and effect of equity incentive through the actual case,so as to provide reference for future equity incentive formulation.Finally,according to the empirical research results,this paper summarizes the full text,and puts forward relevant suggestions from the three perspectives of listed companies,investors and the government: listed companies should avoid the equity incentive plan that the loose conditions lead to the self-interest of the incentive,and achieve the purpose of long-term equity incentive;The stocks of listed companies that implement equity incentives show good investment value for a long period of time,and investors can consider long-term holding;The government supervision department should continue to improve the relevant laws,regulations and policy guidance of equity incentive,establish a more comprehensive constraint mechanism,and reduce the welfare incentive scheme.