The Research Of Equity Incentive’s Impact On Public Company Performance

From the experience in the international market and established researchresults, equity incentive is an effective tool from the capital market. It canhelp solving agency problems of public company, and also enhance operatingresults.After the late start of China capital market since the end of2005, theSFC issued "Administration Method of listed company equity incentive ",China capital market formally entered the standardized and developedstageof incentives. As China’s capital market developing, listed companies learnedto take advantage of incentive tools while using the financing tools, tomotivate the management team.This paper analyzes the status of A-shares of the capital market in recentyears. Compared the main form of equity incentive and characteristics wediscuss the pros and cons of equity incentive. Nowadays, in Chinese capitalmarket, public company’s internal governance level is getting higher thanbefore, and, equity incentive is indeed have a significant positive correlationwith performance of listed companies.Through a combination of theoretical analysis and empirical research,this paper analyzed the situation of incentive in Chinese A-share market,came to the conclusion point of view, and made recommendations. Hope toprovide some inspiration to listed companies in the decision-making, orimplementing equity incentive program.