Research On The Economic Consequences Of FiberHome Communications' Equity Incentive

With the development of social productive forces,the separation of two powers has become the main feature of many contemporary enterprises,so the problem of agency has also become a major problem in modern enterprise management.Due to inconsistent interests,on the one hand,shareholders want managers to work hard from the perspective of the interests of the company,to maximize the value of the enterprise as the goal to enhance the value of shareholders,but due to the manager ’ s efforts to bring the interests of the company itself can not enjoy,so the manager from their own interests,moral hazard and adverse selection problems,such as high on-the-job consumption and avoid engaging in high-risk investment,serious damage to the interests of the company and shareholders;on the other hand,due to the high shareholding ratio of major shareholders,when there is a conflict of interest with minority shareholders,due to the lack of supervision of minority shareholders,major shareholders use the company to conduct “ tunneling ” for minority shareholders,which is conducive to controlling the board of directors to control decision-making and related party transactions,increasing agency costs and damaging the interests of the company.In order to reduce the agency cost of enterprises and solve the agency problem of modern enterprises,equity incentive arises at the historic moment.Equity incentive as a long-term incentive system,by granting management and core staff restricted stock or stock options,improve the relevance of the interests of employees and the company,so that the interests of management and shareholders tend to be consistent,risk sharing,revenue sharing,efforts to improve corporate performance,attract and retain talents,create more value for the company,so as to enhance corporate earnings and share prices.Taking Fiberhome’s three equity incentives as a case,this paper first reads and sorts out the literature related to equity incentives,introduces the relevant concepts and contract theories of incentives,high-ladder team theory,two-factor theory,etc.,and analyzes the mechanism of equity incentives on short-term market response,agency costs,operating efficiency and then the impact mechanism of operating results,and then introduces the case of Fiberhome communications from three aspects: institutional background,company profile and incentive scheme,and introduces the case of Fiberhome Communications from three aspects: institutional background,company profile and incentive scheme,and introduces the market response,agency cost,The operating efficiency and operating results are analyzed and evaluated,and finally the enlightenment and suggestions of Fiberhome equity incentives are drawn,and the conclusions and prospects are drawn.This paper hopes to evaluate the economic consequences of Fiberhome incentives,study the rationality of Fiberhome’s equity incentive plan,summarize the experience and shortcomings from it,and provide correction and support for the relevant research and theory of Equity Incentives in China,so that Listed Companies in China can effectively promote the implementation of equity incentives by combining their own characteristics and industry background when formulating equity incentive plans.