Research On The Economic Consequence Of Zhejiang Longsheng's Constant Increase Type Equity Incentive

Equity incentive is a kind of long-term incentive mechanism which has been widely used in foreign countries.It helps to solve the problem of Interest inconsistency arising from the issue of principal-agent.Namely the shareholder grant the equity or option to the manager,so as to bundle the interest between manager and shareholder for a long time,while maximizing corporate value and maximizing shareholder wealth.There are many motivations for the implementation of equity incentive,which not only can motivate employees to work hard for enterprises to create more wealth,but also improve the performance of enterprises,retain the core staff.At the same time,corporate can implement equity incentive in a variety of ways,such as stock options,restricted stocks and so on.Different equity incentives may have different economic consequences due to the restrictions on the applicable conditions of different incentives,the ownership structure and governance structure of listed companies.Any system has its double-sided,equity incentive is the same,it is like a double-edged sword,using properly can make management and shareholder interests maximize,and improper use will likely make shareholders suffered huge losses.Fixed equity incentive is a new kind of equity incentive emerging in recent years,further study of its economic consequences,namely its positive effect on share prices and corporate performance,and may bring benefit transmission and other adverse effects,which can provide reference for China's enterprises to use fixed equity incentive and the optimization of listed companies' incentive schemes.Based on the motivation of Zhejiang Longsheng's implementation of equity incentive,this paper analyzes the influence of equity incentive on enterprise performance and enterprise share price through financial accounting index combined with the theory of equity incentive and the actual situation of Zhejiang Longsheng,and analysis the consequences of benefit transmission combine the advantages and disadvantages of the fixed incentive analysis,suggestions are put forward according to the research conclusion.Through the research,the following conclusions are drawn: Zhejiang Longsheng improve the business performance through implementation of fixed equity incentive,the share price improve rapidly in a short time.But because of China's equity incentive system and policy imperfect,resulting in Zhejiang Longsheng's implementation of the fixed equity incentive generated the economic consequences of the benefit transmission,mainly reflected in after the implementation of private placement the company's high dividend dividends and operating performance after the brief rise after the fall,which provides a convenient the for benefit large shareholders and infringe the interests of small and medium shareholders.Based on the above analysis,this paper puts forward the following Suggestions: audit subscription object's qualifications strictly,audit the purpose of private placement,formulate relevant laws and regulations,to ensure that the information disclosure real and timely,perfect the protection system to maintenance small and medium shareholders' interests,improving capital market efficiency.