The Listed Firm’s Equity Compensation And Executive Turnover Research

Equity compensation first appeared in the United States in the1950s, and became prevalent in the1980s in western countries, then spread to all over the world in the1990s. Its background is mainly focuses on solving the conflict that the entrusted agency brought, the fundamental starting point is unified management and shareholder’s interests, motivate management pays more attention to the long-term development of the enterprise, reduces its short-term behavior.In China, regulations about the listed company’s equity compensation appear at the end of2005, although there are many companies try to start the equity compensation, but now some relevant supporting system are not perfect, so in practice there are some negative voices which point out that the equity compensation is changing from "golden handcuffs" into "gold watch". Although there are many domestic research focus on the equity compensation, but most of them are about the correlation between the equity compensation and corporate’s performance, also most of them ignoring the initial motivation that the equity compensation can retain executives.In this paper, we selected our country’s listed companies’ equity incentive data from2006to2013as our sample, to investigate the effect of equity compensation to executives change. The study found that in case of we controlled the company’s business performance, the company’s losses, the executives’ age and other factors, the implementation of equity compensation does reduce the probability of executives change, further research found that equity incentive’s retaining function in private enterprises is better than in state-owned enterprises, and no matter what equity incentive they use, stock options or restricted stock equity incentive way, there were no significant effects on executive changes. The research about the relationship between equity incentives and executive changes in this paper will provides new empirical evidence for future research.This paper includes the following six sections:Part1, introduction. First in this section there was a summary of topic background, meaning, purpose and method which are selected in this paper, then introduced the research framework and possible innovation points in this paper.Part2, literature review. Reviewed and commented on some scholars’relevant research.Part3, relevant theories and hypotheses. This section emphasis on human capital theory, incentive theory, the principal-agent theory, the theory of top class and put forward the research hypothesis.Part4, research design. This part mainly presents the research hypothesis of this paper, and introduced the selection of sample, the data sources and the establishment of the logistic regression model.Part5, empirical test. This part mainly based on the data collected from2006to2013, first part were descriptive statistics and multivariate regression analysis. Then I eliminate interference factors and run a robustness test.Part6, conclusion and Suggestions. Through summarizing above content, analysis on the effect of equity incentive, puts forward suggestions for the listed company equity incentive plan.By utilizing the theoretical analysis and empirical research methods. Theoretical research:I believe that the current study focused on the equity incentive Relationship equity incentive and corporate performance in the study of changes in equity incentives and executives is not comprehensive enough, this paper proposes a new perspective new hypothesis. Empirical research:I use SPSS19.0, equity incentives, executives change Logistic regression analysis to explore the effect of the implementation of retention of executives since equity incentive equity division reform, and according to research findings, targeted to make policy recommendations.This article is written by make full use of theoretical analysis and empirical research method. Theoretical research:I think the current research about equity incentive was mainly focused on the study of the relationship between the equity incentive and corporate performance, the study of equity incentive and the executive changes were not comprehensive, so this paper puts forward a new hypothesis from a new Angle. Empirical research:I carried out the logistic regression analysis on the relationship between the equity compensation and executive changes by using SPSS19.0, discussed equity incentive’s executives retention effect after our country implement the tradable share reform, then put forward the corresponding conclusion and suggestions.This paper has two innovations:first, using logistic regression model to measure the impact of equity incentive to executives change. According to the existing research, there is a lack of research on equity incentive to executives change. Through the study of the logistic model, on the basis of previous study, this paper run some tests on the equity compensation from the perspective of executive turnover in our country, and introduced the nature of ownership variables to compare equity incentive’s function between the state-owned enterprises and private enterprises. Second is the sample of refinement. Previous domestic studies on executive changes, the selected samples often did not distinguish between executives’voluntary turnover and mandatory turnover, and executives’ mandatory turnover has little correlation with the equity compensation. So when I carried out robustness analysis, I eliminated mandatory reason due to retirement, expiration of the term, involved, dismissal which leads to executives’ turnover.