| Effective managers incentives can make the interests of shareholders and managers converge, to alleviate the agency problem, reduce agency costs and promote value creation. Theory and practice of corporate governance in western countries has proven equity incentive is an effective corporate governance mechanism, and therefore has been widely implemented in the western capital markets.The equity incentive practices in China explored forward step by step and developed along with our capital market. With the implementation of the split share structure reform, the CSRC promulgated the 《The management approach oflisted company equity incentive program(Trial)》on Dec.31,2005.Lots of listed companies carry out the share reform actively and adopted stock options, restricted stock and stock appreciation rights as the main equity incentives modes, which are similar to the equity incentive plans inwestern developed capital markets,.As another kind of corporate governance mechanism, internal regulatory governance can directly inhibit the manager’s agent behavior due to the presence of specific regulator and visible influencing paths. Internal regulatory governance and equity incentive are two kinds of parallel systematic designs to alleviate agency problems. With the increasing proportion of manager’s ownership, the actual control of the company is also enhanced, which further exacerbate the agency problem. Therefore the company needs to form greater internal regulatory mechanism to constraint the power of managers. That is to say, equity incentive and internal regulatory governance need to be adopted together, in order toform a healthy “incentive and control” system. However, will different internal regulatory governance and equity incentive all exist as such “incentive and control” system? Will the impact of internal regulatory governance on manager’s equity incentive effect differ in different internal regulatory circumstances? These are the main issues of this article.This article selected the listed companies which have managerial ownership in 2006-2014 as the research samples, and choose institutional investors governance, large shareholders governance and QFII governance to represent internal regulatory governance mechanism, tryingto discover the impact of these three internal regulatory governance mechanism on the equity incentive effect through regression analysis. The article found the higher proportion ofshares institutional investors hold, the better effect the equity incentives make. In the sample companies with lower concentration of ownership, with the increasing concentration equity incentives also showed better incentive effect. In the sample companies with higher concentration of ownership, the large shareholders governance had no significant influences on the equity incentive effect. The listed companies without QFII holdings have significantly better incentive effect than the listed companies with QFII holdings. Meanwhile, this article has put forward corresponding policy suggestions according to above conclusions. |
