Research On Performance Evaluation Of Equity Incentives Of Dinghan Technology Co.,Ltd

The separation of two rights in modern enterprise system makes principal-agency problems between enterprise owners and managers.In order to reach their own interests,corporation managers may do some actions or choices which disobey the interests of shareholders.Due to the presence of moral hazard and adverse selection problems,it becomes essential for enterprises to set up incentive and restraint mechanisms.Equity incentives help align the interests of managers with that of shareholders,making managers share interests and risks with shareholders by granting managers certain numbers of shares,thus it is bringing much attention.Since the growth enterprise market(GEM)in China established in 2009,GEM has been an effective supplement of China's capital market.Listed enterprises on GEM began to try equity incentives in 2010 and private companies gradually became the dominant force in the fever of equity incentives.Unfortunately,Equity incentives have been called in question for a couple of fail cases on equity incentives.At the meanwhile,as the first group of listed enterprises on GEM,Beijing Dinghan Technology Limited Corporation apparently tends to make equity incentives plans for its four plans respectively in 2011,2013,2015 and 2016.Then here comes two main questions.How are the four equity incentives schemes? And do equity incentives promote the corporation's performance? This paper highlights evaluating the corporation's performance before and since the implementation of equity incentives.This paper starts with theory,introducing theoretical basis and concepts about equity incentives and main methods of enterprise performance evaluation.After telling the present status of equity incentives implemented by listed corporations on GEM,following is the case study of equity incentives by Dinghan Technology.When evaluating the corporation's performance before and after equity incentives,this paper mainly takes the view of two perspectives: one is the longitudinal angel,from which financial index analysis and Du Pont analysis are adopted;the other is the horizontal angel,from which the efficacy coefficient method is used.The evaluation results show this company has a relatively poor performance before equity incentives and a better performance since implementation.Further study proves the equity incentives play a positive role in promoting the firm's performance.At last,this paper gives some suggestions on the corporation's equity incentive schemes,so as to help the corporation perfect its later schemes to maximize the incentive effect.