Research On The Economic Performance Of Equity Incentives In Listed Companie

As an important means of modern corporate governance,equity incentive,as a long-term incentive system,can combine the short-term interests and long-term strategy of enterprises,and realize the unity of the objectives of equity owners and core managers.With the introduction of relevant equity incentive policies and the improvement and development of capital market,more and more listed companies announce the implementation of equity incentive plans.As of December 31,2020,the proportion of the cumulative number of equity incentive companies announced by A-share listed companies / the total number of Listed Companies in the current year has increased from 2.81% in 2006 to 43.93%.In the process of practice,whether equity incentive can really become a long-term panacea for enterprises,or it is only a short-term life-saving straw for some enterprises still needs to be further studied.The implementation effect of equity incentive has always been an important issue concerned by academia and practice.This paper discusses the impact of equity incentive on the investment behavior and long-term development-oriented behavior-enterprise innovation,which are the important basis of enterprise entity business activities.On this basis,it further discusses the impact of equity incentive on the stability of stock price of companies in the secondary market.In the research process,this paper analyzes the specific impact,action path and situational conditions of equity incentive from both theoretical and empirical aspects.At the same time,it analyzes the development status of domestic equity incentive in detail,and selects CATL as a case for key research,in order to provide policy suggestions for the government and enterprises to improve the equity incentive system and scheme and give full play to the function of equity incentive.The structural arrangement of this paper is mainly divided into five parts: Part I,the introduction and literature review,including the first to second chapters,clarify the research content and research methods of this paper,define the concept and function of equity incentive,put forward possible innovations and deficiencies,and sort out and summarize the existing research at home and abroad on this basis;Part II,the theoretical basis and practical background,which is the third chapter reviews the principal-agent theory,residual claim theory,human capital theory,incentive theory,endogenous economic growth theory,information asymmetry theory and other important theories related to equity incentive,and analyzes the system development process and implementation of equity incentive in China The current situation of equity incentive of the main modes is described;Part III is empirical analysis,including chapters 4 to 6,which analyzes the impact of equity incentive on investment efficiency,enterprise investment and financing behavior,enterprise innovation and stock price collapse.Firstly,Richardson model is used to calculate the gap between the new investment and the optimal investment,get the indicators of over investment and under investment,and construct psm-did model to mine the net impact of the implementation of equity incentive.Then,using the company’s annual report as the original text,using the method of "seed word set + word2vec" similar word expansion "based on the dictionary to construct the innovation degree index to investigate the impact of equity incentive on enterprise innovation.Finally,based on the extended index model,the negative return skewness coefficient(NCSKEW)and return fluctuation ratio(DUVOL)are constructed to discuss whether equity incentive will change the stability of stock price in secondary market companies;Part IV is the case analysis,namely chapter seven explains the implementation effect of equity incentive in detail with the case of CATL.Clarify the three-phase equity incentive plan implemented by the company since its listing in 2018,analyze the performance of the company at the financial and non-financial entity levels after the implementation of equity incentive through the horizontal comparison between the industry and competitors,and reveal the effect of equity incentive in the secondary market.Part V conclusions and suggestions.The main conclusions are as follows:Firstly,equity incentive has a significant positive impact on the investment behavior,the basis of enterprise entity operation.Equity incentive can reduce over investment by alleviating the agency problem between management and shareholders;When the level of internal control is poor and the number of media reports is large,the negative correlation between equity incentive and over investment is more significant;When the development level of digital finance in the region where the enterprise is located is higher,especially when the degree of digitization is higher,equity incentive can play a role in alleviating the insufficient investment of the enterprise;The economic consequence analysis shows that equity incentive can promote the future performance growth of enterprises by optimizing investment efficiency.Secondly,equity incentive can also promote the long-term development oriented entity business behavior-enterprise innovation,but this effect is limited.When the incentive object is stock option,the enterprise is state-owned enterprise,the intermediary centrality and structural hole of directors’ social network are low,and the government subsidy is high,the promotion effect of equity incentive on enterprise innovation is more obvious;Mechanism analysis shows that equity incentive mainly affects enterprise innovation by affecting enterprise investment and financing behavior.On the one hand,equity incentive can increase the long-term investment represented by the R & D investment of enterprises and reduce the short-term investment such as financial assets.On the other hand,as a market signal,equity incentive can alleviate the financing constraints faced by enterprises;In order to promote enterprise innovation,there is an optimal range of equity incentive intensity.Thirdly,from the perspective of stock price collapse,this paper studies the economic consequences of equity incentive and the impact of equity incentive on the stability of stocks in the secondary market.The results show that there is a significant positive correlation between the degree of equity incentive and the risk of stock price collapse;At present,the negative effects of equity incentive are more obvious when the shareholding ratio of the five major shareholders is low,the incentive mode is restricted stock,the synchronization of the company’s stock price is low,and the analysts track less;Party organizations’ participation in governance is conducive to reducing the risk of stock price collapse,and the "cross employment" in private enterprises makes the negative impact of equity incentive no longer significant;Mechanism analysis shows that equity incentive conceals bad news at the company level by reducing annual report risk information disclosure,reducing the quality of accounting information and increasing the optimism of annual report disclosure,so as to increase the risk of stock price collapse.This suggests that the negative effects of equity incentive exist at the same time,and will be reflected in the secondary market.Fourth,through the analysis of the equity incentive case of CATL,it is found that after the implementation of the three-phase equity incentive scheme in the form of restricted shares,the operation ability,profitability,growth ability and solvency have been improved to varying degrees,and the implementation of equity incentive is conducive to the construction of enterprise staff talent team and provides human capital foundation for the sustainable development of enterprises.The stock excess return calculated by the event study method shows that after each implementation of equity incentive,the market gives positive feedback to the company.In short,the implementation of equity incentive has produced a comprehensive incentive effect,but there are also some problems,such as the single exercise index based on operating income,the diminishing marginal utility of incentive,the additional burden brought by high-frequency and short-term incentive,and the self-interest behavior of management.Based on the research conclusions,the following policy suggestions are put forward: First,promote the implementation of equity incentive,further reduce excessive investment,increase investment in innovation,promote the optimization and improvement of enterprise investment efficiency and innovation efficiency;Second,it is necessary to formulate incentive plans scientifically,select appropriate incentive methods,set scientific exercise objectives,and coordinate the frequency and intensity of equity incentive implementation to ensure maximum incentive benefits;Third,improve the internal governance environment,improve the corporate governance structure,actively play the role of the board of directors,the board of supervisors and the Party organization in modern corporate governance,restrain the self-interested behavior of the management;Fourth,improve the external institutional environment,further improve the manager market,commodity market and capital market,accelerate digital transformation,increase innovation support,and create a good external environment for the implementation of equity incentive.Combined with classical theories,large sample data and specific cases,this paper selects enterprise fundamentals such as enterprise investment,innovation and stock price collapse and stock performance in the secondary market as the research entry point,investigates the implementation effect of equity incentive,and enriches and deepens the relevant research on the economic consequences of equity incentive.In the research process,this paper adopts the method of combining the emerging machine learning technology with the classical econometric research paradigm,introduces the word2 vector neural network model based on the idea of deep learning,and constructs the corresponding indicators suitable for the financial special corpus such as Chinese annual reports.The in-depth discussion of the topic has certain reference value for the in-depth discussion on the topic of "artificial intelligence plus economics" in academic circles in recent years.This paper also deeply explores the internal transmission mechanism of the implementation effect of equity incentive,and examines the role of situational factors with Chinese characteristics such as the development of digital finance,government subsidies,the nature of property rights and the embedding of Party organizations,which provides valuable enlightenment for the corresponding equity incentive practice and system design.