Research On The Efficiency And Countermeasures Of Stock Ownership Incentives Of Chinese Listed Companies

Stock ownership incentives have almost had a 60 year history. They were proved to be an effective way to solve the principal-agent problems between the managers and the stock holders. In China,"the Management Approach about Stock Ownership Incentives of Listed Companies (trial)"come into effect in 2006,allowed the Listed Companies which had completed share reform to put the equity incentives into practice, and we start exploring the ways of making good use these incentives. Can this new innovation bring the expected result, and work in an effective way? In fact, none of the institutions can be founded without restrictions,it may be effective in one country while failed in the other. So we must study the conditions of equity incentives, and this is very important for both macroeconomics and the corporate entities.In this paper, the theory related to stock ownership incentives is presented briefly from the perspective of new institutional economics and information economics first. On this basis, from the corporate governance, financial system, performance evaluation and promotion system, capital markets, product markets, professional manager market ,the basic conditions for stock ownership incentives of Chinese listed companies get an in-depth analysis that the market-based system has existed. And the empirical test results through Panel data model show that the stock ownership incentives in the listed company is effective.From theoretical analysis and empirical testing results, we believe that although the conditions for stock ownership incentives are far from maturity,there is a reverse mechnism between the stock ownership incentive and it's effective conditions,which can improve the effectiveness of equity incentive system.In other words, the implementation of stock ownership incentive plans in Chinese listed companies is feasible and effective.Finally, the paper presents some countermeasures to upgrade the effectiveness of China's equity incentive system,which contain enhancing theeffective conditions for these incentives,exploring the incentive models applying to Chinese listed companies,and strengthening the regulation on listed companies.