Study On State-owned Listed Companies's Equity Incentives And Firm Performance Relationship

Equity incentive was born in the 20th century, the United States, has been decades in the West history. As a long-term incentive mechanisms equity incentive plays an important role in enhancing corporate value and promoting economic growth. So, equity incentive are widely used in the management of national corporate practice. In according with Agent theory, equity incentive can integrate the interests of managers with shareholders, to a certain extent, solve the modern enterprise control and residual claim separation of contradictions, through long-term incentive to managers to ensure that the enterprise value maximization objectives. Therefore, whether the role of equity incentive embodied in the ability to improve enterprise performance.The domestic researches of management Incentives and enterprise performance, mostly made before 2005.And in 2005 tradable share reform started in China. With the completion of share reform, China's capital market has undergone major changes and thus need new researches as a guide. Under the sepecial China's institutional environment and market environment, this essay will find out the relationships between equity incentive and enterprise performance in the field of the state-owned companies in China.Based on the relevant theories and literatures at home and abroad, this paper defines the relevant concepts of equity incentives,explains the meaning of equity incentives, features, working principle, analyses the function of equity incentive coordinating relationship between principal and agent interests, describes the implementing fundation of equity incentive in China, and reviews the development of equity incentive before and after the tradable share reform. Besides, the paper give further analysis by statistical methods on the main modes of equity incentive in China.The paper select 39 state-owned listed companies as the research object from 2005 to 2007 equity incentive companies. An Empirical Study with the help of SPSS 16.0 statistical software, use factor analysis, curve estimation, regression analysis, econometric methods to explore the relationship between equity incentive and enterprise performance in the field of the state-owned companies in China. And then use means compare method to test if there are performance differences between state-owned listed companies with equity incentive and state-owned listed companies without equity incentive.After that test if there are performance differences between state-owned listed companies with equity incentive and non-state-owned listed company.It is drawn a conclusion from above:(1) using three kinds of function——Linear, Quadratic, Cubic, building four separate regression models found that managers equity incentive level and the state-owned listed companies'performance have no relationship, and further range test showed that there is no interval effect existing between equity incentive level and the state-owned listed companies'performance. (2) Compared state-owned listed companies with equity incentive to state-owned listed companies without equity incentive, the corporate performance is not significantly different. (3) use independent sample T testing method to compare state-owned listed companies and non-state-owned listed company with equity incentive and found that equity properties do not have a obvious effect on equity incentive. Moreover, the absence of owner of state-owned listed companies is not the main reason of invalid equity incentive. Obtained by the analysis of state-owned listed companies in China equity incentive basically invalid reasons are as follows:the proportion of managerial ownership is low, the weak capital market lack of efficiency, corporate governance need to be perfect, manager of market is imperfect, and lack of competition, which led to state-owned listed companies equity incentive not to play its due role.According to this paper, the countermeasures problem:state-owned listed companies should promote the development of equity incentive system from the company's external environment and internal factors. The external environment, including: strengthening the capital markets, increase capital market efficiency; improve the market of professional managers, and train outstanding professional managers; improve the implementation of equity incentive laws and regulations, and promote the development of incentive stock options. Internal factors include:Construction of a reasonable corporate governance structure, such as strengthening the board construction of state-owned listed companies, improve the independent director system, build iremuneration committees and so on; according to enterprise in which industry characteristics, geographical location and enterprise itself feature determining a reasonable level of equity incentives and appropriate to agent; select the reasonable Performance Evaluation Index, comprehensive and objective evaluation of performance of state-owned listed companies.