A Research On Executive Equity Incentive And Firm Value In High Technology Company

Executive equity incentive is popular in the west and is considered to be an useful way to solve principal-agent problem.Our country adopt executive equity incentive in1997, but the effect remains to be tested. At present, foreign equity-based incentives for the operators and the firm value of the research are mature, but our country for the study of these two is a simple copy of the western study. Considering the foreign study and the actual situation of China this article will study the relationship between executive equity incentive and firm value in our country to conclude some useful suggestions.This dissertation is to study the determinants of executive equity incentive and the link between executive equity incentive and value in endogeneity about the Chinese high technology listed firms. And we think executive equity incentive is an endogenous variable. According to the requirement of study in endogeneity, this paper select high technology firms as the sample, use balanced panel data between 2004 and 2007, adopt 2SGLS to control the endogeneity of executive equity incentive resulted from the affection of exogenous factors and endogenous factor in the firm's contracting environment. This paper consider the affect of the level of public debt and the firm size to executive equity and also consider the affect of the ratio of the R&D to the firm's value. Then formula will be composed of two simultaneous equations.This paper is composed of four chapters. The first chapter preface. It provides basic ideas and methods, background and significance, as well as the basic framework of this article. ChapterⅡis the theoretical basis and introduce some related concepts. Chapter III is the core of the article, including the theory of empirical analysis, as well as the assumptions, and then in conjunction with equations to solve the endogenous problems. Chapter IV is the conclusion of this article, including the third part's results of empirical analysis and conclusions made in accordance with the recommendations, the final analysis of the study in this paper and follow-up study of inadequate direction for future research to prepare. Through research get a number of useful conclusions: First, executive equity incentive is an endogenous variable. This conclusion is verified the correctness of the perspective of this paper.The level of public debt firm value affect executive equity incentive, proved executive equity incentive is an endogenous variable rather than an independent exogenous variable. This conclusion is verified the correctness of the perspective of this paper.Second, executive equity incentive don't affect firm value while the firm value affect executive equity incentive.The empirical results show that operators of equity-based incentives are endogenous from the firm value determined by the firm value. This conclusion is consistent with the current research. Companies should adopt other ways to improve firm value other than through executive equity incentive. This paper do not deny executive equity's incentivte role and the conclusion does not apply to the industry as a whole. Meanwhile executive equity incentive is an endogenous variable and each firm should give executive equity. This provide empirical envidence for Human Capital Theory.