A Study On The Factors Affecting The Equity Incentive Effect Of China 's Listed Companies

In the 1990 s, Equity incentive is introduced from abroad for the first time in China. After that, equity incentive system in China began to mature. Meantime, there has also been a lot of problems. Our equity incentive system has been further refined and improved after Stock reform in 2005, so more companies were willing to introduce equity incentive to help them solve the agency conflict and improve company profits. From 2006 to 2014, the equity incentive plan was exerted in 783 Chinese listed companies, the majority had played a positive effect, however, few companies not only failed to achieve the performance increasing, but also declining. Therefore, this paper aim at combining and researching the factors affecting the incentive effects of chinese listed companies.On the basis of relevant theories, this paper summeraize and analyze the internal and external factors probably affecting company equity incentive, and specify how these factors affect the equity incentive in the course of selection, formulation and practice. Through the analysis of the launch of the equity incentive plan in listed company HUALAN BIOLOGICAL ENGINEERING,INC in the May 2013, this paper judge the reasonable and unreasonable aspect in equity incentive process, analyze the reasons behind it, and give the corresponding advice to help corporation to make decision.This paper concludes that enterprises in the use of equity incentive need to investigate and research their own internal and external conditions to make the right choice in the course of selection, formulation and practice, so that achive the goal of maximizing the shareholder value and preventing brain drain.