Research On The Impact Of Equity Incentives On Corporate Performance Of DCITS

Equity incentive is a long-term incentive mechanism based on equity and in the form of a contract,which originated in the 1950s and was introduced to China in the 1990s.Implementing equity incentives for incentive targets not only helps to solve the problems caused by the delegation agency within the company,promotes the unity of interests between company owners and managers,but also has significant significance for achieving the sustainability of company performance and value improvement.The market has fully proved that "compensation in the form of shares is gradually becoming the core part of the comprehensive compensation system for executives of listed companies".More and more listed companies actively use medium and long-term incentive tools,establish sound human resources compensation systems,and help the long-term development of companies.At the same time,the government has issued relevant policies to encourage companies to develop medium and long-term incentive plans and increase the intensity of talent incentives.China’s economy has reached a stage of high-quality development,necessitating a more effective,comprehensive,and stable financial system to provide the necessary support.Financial technology,as a typical representative of the digital economy,plays an important role in facilitating high-quality economic development.The industry is highly competitive for talent,and equity incentives not only help to enhance a company’s attractiveness to talent but also effectively weaken the conflict of interests between company managers and core technical personnel,thus forming a community of shared interests for the enterprise.This article selects Digital China Information Service Co.,Ltd.(stock code:SZ000555,referred to as "Digital China")as a research case.As a leading financial technology enterprise in China,Digital China is the leader in bank IT.In 2019,as a leading fintech enterprise in China and a top player in banking IT,Digital China Information Service Company Ltd.(stock code:SZ000555,referred to as Shenzhou Information)innovatively implemented both stock options and restricted stock units as equity incentives for different incentive objects.The equity incentive plan was based on net profit as a performance target,and was assessed in two stages,both of which were achieved and successfully unlocked by the end of 2020.Building on a literature review of equity incentives,this paper defines the concept,examines the underlying theory and incentive models,and analyzes the impact of the equity incentive plan on Shenzhou Information’s performance by comparing and contrasting different performance indicators before and after implementation.The paper analyzes the effects of the equity incentive plan on financial indicators such as operating performance,average annual cost of equity incentive plans,and cash ratio,as well as non-financial indicators such as employee turnover rate,R&D investment,and individual performance.Moreover,an economic value added(EVA)approach is proposed to analyze the impact on performance.Finally,drawing on the event study method,the paper examines the short-and medium-term market reactions in terms of excess returns,stock prices,and market capitalization.In conclusion,the implementation of equity incentives has brought new vitality to Shenzhou Information,creating new development opportunities in both financial and non-financial areas.The study identifies some shortcomings in the design of the equity incentive plan,such as the duration of the plan,the number of reserved shares,and the incentive model,and proposes corresponding optimization recommendations for future equity incentive plans.The research findings can also serve as a valuable reference for companies developing or implementing equity incentive plans.