The Research On The Correlation Of Management Equity Incentive And Corporate Performance

In the modern enterprise system, the interests between principal and agent is a considerable conflict, the production of equity incentive system provides a good way to solve the contradiction between the two, so that the two sides have the same interest as far as possible.From 1980's, China's enterprises began to explore the system of equity-based incentives, but because of the lack of relevant laws and regulations, guidelines, this road does not go smoothly, until 2005, after the completion of equity division reform, the laws and regulations on the equity incentive system have been promulgated one by one.Therefore, we should study the relationship between manager stock option and corporate performance in order to improve the equity incentive mechanism and companies's governance structures.The paper uses theoretical research and empirical research to study the relationship between the equity incentive and corporate performance after the equity division reform. In the theoretical research, this paper describes the related theories of equity incentive and literature review, and then gives a brief overview of he history of changes in equity-based incentives in China;in empirical research,the paper takes the 29 companies which implemented the equity incentive between 2006 and 2007 as the sample, the study period is the first year,the second year and the third year after the implement of the equity incentive,and then derived the consolidated financial performance through the factor analysis,lastly the paper sets up a regression model of management equity incentive and corporate performance,there are four control variables in this model, they are the size of the company, the radio of the first shareholding,the managements' annual monetary compensation and the proportion of independent directors.Through empirical research, this paper draws the following conclusions:in the first year of equity incentive,there is a strong correlation between the equity incentive and corporate performance, but in the second year and the third year, the conclusion is opponent.In the four control variables ,only the size of the company is correlated with the corporate performance,the others are significant.