Research On Equity Incentive Scheme And Implementation Effects Of Listed Companies On The STAR Market

Equity incentive is a way of rewarding and attracting core technical talents for enterprises by aligning their interests with those of the enterprise through ownership sharing.Equity incentive has been widely used in developed countries,but it is relatively new in China and lacks a sound legal system.Therefore,designing a complete and effective equity incentive scheme is an important challenge for listed companies.In 2019,China established the Science and Technology Innovation Board(STAR Market),which is a new market for high-tech enterprises.The China Securities Regulatory Commission(The CSRC)has introduced many new policies for equity incentive on the STAR Market,which relaxes the conditions and provides convenience for listed companies on this market to implement equity incentive.As the core element of the STAR Market,scientific and technological innovation talents are very scarce and valuable for listed companies on this market,and human capital plays a vital role in high-tech enterprises.The competition among these companies is also very intense.Equity incentive can help these companies retain and motivate their core innovative talents by forming a long-term community of interests with them.It has become a prevalent way of incentivizing employees on this market.Since the establishment of the STAR Market,nearly half of the listed companies on the STAR Market have joined the ranks of equity incentives,and have achieved varying degrees of incentive effects.Since the establishment of the Science and Technology Innovation Board,nearly half of the listed companies on the STAR Market have joined the ranks of equity incentives,and have achieved varying degrees of incentive effects.Equity incentive is a common practice among listed companies on the Science and Technology Innovation Board(STAR Market),which is a new market for high-tech enterprises established by China in 2019.However,there is a lack of research on the equity incentive of the STAR Market,so this thesis aims to fill this gap by examining the equity incentive plan of listed companies on this market.By analyzing its equity incentive plan and its effects in depth,this paper draws some lessons and implications that can be useful for other listed companies on the STAR Market that intend to adopt equity incentive.This paper is based on the case of the issuance of new equity incentive policies on the Science and Technology Innovation Board,and the equity incentive plans implemented by listed companies on the STAR market.It describes the general design features of the plan and compares it with other sectors’ policies.It also takes Guang Feng Technology,one of the first listed companies to implement equity incentive,as a case study.Based on the perspective of principal-agent theory,human capital theory and incentive theory,This thesis uses literature analysis,comparative analysis and event study methods to present the specific settings of Guang Feng Technology’s equity incentive plan elements,such as incentive targets,incentive modes,exercise conditions,validity period,grant price and quantity.It examines the design features of its equity incentive plan and the improvement of the three plans.Then it assesses the effect of Guang Feng Technology’s equity incentive on three dimensions: market response,financial performance and non-financial performance.And it investigates how equity incentive affects company performance.This thesis finds that Guang Feng Technology has enhanced its stock price,financial performance and R&D innovation capability to some degree after implementing equity incentive.Moreover,Guang Feng Technology’s equity incentive has a positive impact on optimizing its equity and employee structure,lowering its agency costs and strengthening its core competitiveness.Finally,through the research on the incentive plan and implementation effect of Guang Feng Technology,this thesis summarizes several points of the equity incentive plan of Guang Feng Technology that can be used for reference.For example,the shareholding of core technology employees has improved the company’s R&D innovation level and reasonable incentive target range stabilizes the company’s core technical team.This thesis also offers some insights and suggestions on designing equity incentive plans for other listed companies that intend to implement equity incentive.