Study On The Effects And The Influence Factors Of The Stock-based Incentive Level

With the establishment and development of modem enterprise system, the problem ofcorporate governance, especially the moral hazard resulting from misaligned interest betweenshareholders and managers emerges, the solution to which mainly lies in stock incentivesystem. In recent years, after the shareholding reform, the more effective China capitalmarket, the related laws, regulations and the continuous innovation of the system itself makeit a tendency. Now, being adopted by more and more listed companies, the system is playingan increasingly important role. Thus, for the listed companies to implement the system moreeffectively, it is imperative to study the effects and the influence factors of the system.In this context，this paper is based on some theoretical and practical research at homeand abroad. Taking the mainboard, SMEs board and GEM listed companies which havepassed the stock incentive plans from2008to2012as samples, this paper’s result shows thatthe correlation between the incentive and company performance is significant, and the SMEsboard and GEM listed companies show better performance. In the study of the influencefactors, taking the five possible factors, that is corporate performance, capital capacity,ownership concentration, board independence and executive compensation into consideration,the results show that, in mainboard listed companies, corporate performance, ownershipconcentration and executive compensation correlate with incentive level significantly, inSMEs board listed companies, corporate performance and executive compensation correlatewith incentive level significantly, and in GEM listed companies, capital capacity and boardindependence correlate with incentive level significantly. At last, through analysis of theabove results, this paper proposes, for the improvement of the stock incentive system, theways to optimize overall incentive level, ownership structure and corporate governance structure,and the factors needing consideration in defining incentive level.