Empirical Research On The Effect Of Stock Incentives On Corporate Investment From The Perspective Of Growth Opportunity

As one of the tools to resolve the agent conflicts between shareholders and managers, stock incentives help to unify the benefits between them. Establishment of a reasonable executive incentive system can restrict executive behavior, and then incent to maximize capacity. It is the core content of an effective corporate government. Under the circumstances of executive incentive mechanism in our country, it hasn't been a long time since it came on, and many companies did not fulfill their incentive period designed. So it's a little early if we use the impact of stock incentives on companies'performance as metrics. And it shows that there is no conclusion in this field. This paper analyses the impact of stock incentives on companies'investment behavior, which is the source of profit, and tries to find whether this governance tool optimizes managers'investment behavior. At the same time, we use growth opportunity to judge overinvestment and underinvestment, and try to find out: Will growth opportunity affect the implementation of stock incentive policy? When it comes to high-growth companies, do they underinvest or overinvest? Does stock incentive policy act positively on manager's investment behavior?First, we make a category statistics of the stock incentive's present situation, and make a conclusion of its features. Then in theory part, we analyze the different kinds of non-moderate investment due to different growing stage, and build a contract model of investment optimization based on stock incentive. In empirical study, we follow three steps. First, we select a paired sample not implementing stock incentive, test their growth differences before incentive policy, and find out companies carrying out this policy generally have higher growth opportunity. Then we prove that in high-growth companies, the phenomenon of underinvestment generally exists, not overinvestment. At last, we test whether stock incentive policy has a positive effect on inhibiting underinvestment, and we find a positive answer.At the end of this paper, we propose some principles to improve the stock incentive policy, and state that we have to improve internal governance environment, capital market and stock market to build a good system for stock incentive being more effective.