An Empirical Study On The Relationship Between The Executives' Equity Incentive And The Company's Growth In The Chinese Listed Company

Based on Principal-Agent Theory, by sampling among the A-share listed companies in Shenzhen Securities Exchange as of the end of 2004-2006 date, we use correlation analysis and linear regression analysis make an empirical study on the relationship between the executives' equity incentive and the company's growth in the Chinese listed company .From the empirical analysis, we find that there is a significant correlation between the executives' equity incentive and the company's growth (equity incentive strength). And the relation is being strong yearly. This indicates the effectual system of CEOs' incentive is being gradually established.Based on the empirical analysis, we also found that the equity incentive strength is declining year by year although CEOs' salaries and the percentage of share hold by CEO are improving, That is to say, the increase of executives' equity incentive can not catch up with the growth rate of monetary remuneration and the percentage of share holding executives.When the equity incentive gets under way in our country, the equity incentive strength is declining yearly, this shows that equity incentive is in a misunderstanding. This seems the higher the percentage of share executives' holding, the better the company's growth. But we found the higher the proportion of share executives' holding, the lower the company's growth instead in 2004-2005. Even in 2006, the positive impaction is not significant.This paper takes the point of holds that the effectiveness of the CEOs' incentive mechanisms, the focus is not the proportion of share executives' holding, but the executives' equity incentive. And improving long-term incentive in their salary structure, it can play skillfully a strong incentive effect.To this situation, this paper proposed a pointed comments.