Research On Equity Incentive Contract Restriction-based On The Perspective Of Internal Supervision

Separation of ownership and management is a cornerstone of continuous developmentof modern joint-stock companies, but this separation also brings principal-agent problembetween shareholders and managers. On the one hand we can solve the principal-agentproblem by strengthening the supervision of managers, on the other hand by the managersincentives. Equity incentive is a common incentive used at home and abroad. In China, thetime that listed companies implement equity incentive is short, plus the overall legalenvironment and corporate governance mechanism is not perfect, so whether the equityincentive can play the role of incentive, largely depends on the restrictive of the contractdesign. During the making process of equity incentive contract, the company will besubject to internal and external supervision. In fact，external oversight environment arebasically the same, so the focus of this study is whether internal oversight equity will affectthe restrictive of incentive contracts.In this paper, we choose domestic listed companies which were announced andauthorized equity incentive for the study since December31,2005the "managementapproach" promulgated to December31,2013. First, use independent samples T-testscreening select elements which can measure the restrictive of equity incentive contract,and then divide the restrictive of the degree to low, medium and high three levels. Then useAHP set up the oversight strength composite indicators. Finally, through the establishmentof an orderly Discrete Choice Model research on the impact of internal oversight strengthincentive contract restrictive of the shares. In addition, the paper further comparative studywhether the relationship between the two differ in different incentives ways and differentactual control nature. Empirical results show that:（1）Equity incentive contract incentive term and vesting (unlock) performanceconditions are the restrictive elements. The longer term incentives, more rigorous exercise(unlocked) performance conditions, the stronger equity incentive contract restrictive.（2）The greater the intensity of internal oversight, the stronger the equity incentivecontract restrictive. Internal Oversight strength is synthesized by ownership concentration,the shareholders’ meeting attendance rate, the proportion of institutional investors holding,the proportion of independent non-executive directors, CEO duality and the supervisory shareholding proportion.（3）The strength of internal oversight of stock option scheme significantly affectcontract restrictive, but the effect of the internal oversight of restricted stock way to thecontract restrictive is not significant.（4）Whether it is the state-owned holding, or non-state-owned holding companies,internal supervision intensity significantly affects the equity incentive contract restrictive,while in the samples of the non-state-controlled listed companies, the asset-liability ratiosignificantly affects contract restrictive.