Empirical Study On Effects Of Stock Incentive In Chinese Listed Companies

Acting as an important means of solving principal-agent problems in modern enterprise, stock incentive has been proved can effectively improve companies performance and accelerate economic development. Despite early seeking after equity incentive in the 1990s, the incentive effect was not obvious because of lack of policy. Therefore many people had questioned and doubted the equity incentives in China and there is no breakthrough in equity incentive. However, equity incentives environment has been improved and the enthusiasm of listed companies to implement equity incentives is ignited again., along with the reform of split share structure in 2005 and issuance of "shares of listed companies incentive management approach" and other relevant laws and regulations. This dissertation develops with this background.The article's purpose is to reveal market effect and performance effect of stock incentive in listed company through empirical study. Based on the review of related literature, parse of theory of stock incentives and method , the paper take the listed companies for sample which have completed the split share reform in Shanghai and Shenzhen stock exchanges. First, the paper studys on the market effects by methods of event study and then distinguish different effects of different style. Following that, the second part analyzes five aspects of companies performance by contrasting method of accounting index, including comparing the companies with the market and the different time.The result has show that stock incentive in listed companies in China have market effect but do not have performance effect. First, the companies have notable abnormal return in event day and bring to positive market effect. Second, after stock incentive, the companies don't have a significant improvement in performance. Finally, the paper put forward some suggestions aiming at the problem of practicing of stock incentive, including improving the effectiveness of capital market , improving the relevant laws, regulations, and supporting policies, improving the corporate governance structure and establishing a scientific system of performance evaluation.