Research On The Implementing Effect Of Equity Incentive Based On The Listed Company Of China

In the modern enterprise systems, the relationship of the interests of management and shareholders is inconsistent and even confrontation. One of the most effective means to deal with this problem which called the "Agency Problem" is the equity incentive mechanism, which coordinates the interests of both sides as much as possible to improve the operating efficiency.As an important incentive mechanism for modern companies, equity incentive system has been applied in a wide range of western developed countries, especially in the United States—Where relative theories and practice. In recent years, some of China’s listed companies began to apply equity incentive system and some of them have developed better. What’s more, some experiences are also accumulated. But due to the constraints of the realities, the government has not established necessary and supportive equity incentive laws and regulations, even relevant ones. The validity of the capital market also made the development of incentive stock options rarely bumpy. However, since the end of2005, the China Securities Regulatory Commission promulgated "Equity Incentive Measure for the Listed Companies", which provides policy basis and operating guidelines for the share reform of listed companies. With the following release of the "Company Law", the "Securities Act" and other relevant ones, the implementation of equity incentive began to be standardized. And the equity incentive plan attracted more and more attention in China.This paper studies the basic concepts and theories of equity incentive in the first part, so as to make a basic understanding of the equity incentive mechanism, and to lay a theoretical foundation for this study. The second chapter focuses on several current common equity incentive modes, and analyzes the advantages and disadvantages of stock options, restricted stock, stock appreciation rights, performance stock, phantom stock, and employee stock ownership plan. These six kinds of modes provide a basis for the following case studies. Then I detail the development of the situation of domestic and foreign equity incentive, and draws a conclusion that foreign equity incentive system develops more perfect and get supported by more people. While in our country due to lack of effectiveness of the capital market, the effect of equity incentive implementation was not that significant. To make further analysis, the third chapter briefly introduces companies that have carried out equity incentive mechanism, and find that the performance of these companies is generally higher than non-implementation counterparts. Then the three typical cases, Qingdao Haier, Shenzhen Vanke, Bank of Communications, are selected as examples of stock options, restricted stock, and stock appreciation rights for detailed analysis. In the last chapter, some recommendations are put forward to solve the problems which pointed out in the case study of China’s current equity incentive plansThe innovation of this paper is that, equity incentive mechanism has positive effect is certified through the analysis of three different modes with cases in detail. The shortcoming is that it only proposes the positive effect of incentive stock options, while a series of relative factors, such as the cost, human resources are not in consideration, which I hope to solve in the future.