The Research On The Factors Influencing Equity Incentives Ways Selection Used By Listed Companies In China

With the rapid development of economic and the modern corporate systemestablished in China, agency problem caused by the separation of ownership andmanagement is increasingly serious. Originated in the1950s the equity incentivesystem has been proved a long-term incentive effect on the management. It hasbecome effective means of encouraging the agent concordant with the interests ofprincipal and reconciling the separation between the principal and the agent afterdecades of development and improvement. An increasing number of listed companiesimplement equity incentive plan and adopt stock options and restricted stock in moreand more matured China’s securities market.This paper mainly studies stock options and restricted stock and makes acomparative analysis about the system similarities and differences between them.Then the paper selects the listed companies announced equity incentive plans fromJanuary1st,2010to February28th,2013as sample to establish logistic mode andanalyzes the impact of the variables of various firm characteristics on the variable ofequity incentive ways selecting tendency. The results show that the corporate growthand corporate earnings are the main factors affecting the equity incentive selectingtendency and respectively in the significance level of5%and10%tend to choose theway of stock options; Corporate cash flow, the nature of industry, the nature of thecontrolling shareholders, executives age and the proportion of executives holdinghave no significant effect on the equity incentive ways selection; Good corporate cashflow, state-owned enterprises more incline to choose the way of stock option, but notsignificantly; Ownership concentration, the proportion of independent directors andthe chairman serving as the manager or not these three corporate governancecharacteristics have no significant effect.Companies should optimize ownership structure, strengthen the supervision andbalance on equity incentive between independent directors and the Supervisory Board,set up special remuneration committee and select the appropriate equity incentivemethod with reality to shape firm-specific incentive mode and gradually expand theenterprise’s equity incentive receiving area to the impelling role of equity incentive.