Research On The Correlation Between Equity Incentive Plan And Internal Control Quality Of Listed Companies

With the outbreak of the bankruptcy of Enron,the cases of failure of companies' internal controls are numerous,such as Lehman Brothers,the domestic China Aviation Oil event,China Shipping funding scandal,China Ocean Shipping Company ST event.In order to protect the interests of investors and enhance the efficiency of the capital market effectively,domestic and foreign academic circles and government regulators have made great efforts to improve the internal control quality.From the perspective of world,internal control system and related research have been improving increasingly,but the relevant measures are still in the stage of strengthening the external supervision,and the managers are lack of initiative.With the formal implementation of the "Equity Incentive Measures for the Administration of Listed Companies " in August 2016,China's equity incentive has opened a new chapter,but also bring new opportunities for improving internal control quality.As we all know,the manager of a listed company is responsible for organizing and leading the daily operation of the internal control,and the object of equity incentive is an important dynamic factor in corporate governance structure.In the process of the construction and implementation of the internal control,the manager will weigh the gains and losses of personal interests inevitably,thus,the key to improve the internal control quality is the impact of equity incentive on the manager who is the main subject of internal control.In recent years,the number of the listedcompanies which have implemented equity incentive has grown rapidly,but the design of plans is diverse.Most of the studies consider the equity incentive scheme as a homogeneous one,ignoring that the mechanism of different equity incentive plans is also different,there is little empirical analysis in the design of equity incentive plans.Therefore,researching the correlation between equity incentive plan and internal control quality has important significance.It is not only to promote the initiative of managers who improve the internal control quality,but also to achieve the result of long-term encouraging the management.The research is based on Principal-agent theory,Asymmetric information theory and Human capital theory,etc,and combined with the situation of equity incentive implementation and background of mandatory disclosure of internal control information.This article analyzed and summarized the domestic and foreign equity incentive and the internal control quality research using the method of analysis in the literature.Then this paper analyzed and empirically researched the correlation between equity incentive plan and internal control quality with the standard research method and statistical analysis method,with a view to be able to draw scientific conclusions.The study conclusions are those: The implementation of equity incentive in the listed companies will help to improve internal control quality.Meanwhile,different equity incentive plans have different effects on internal control quality,including: The combination of incentive modes can improve internal control quality more than a single incentive mode;Improving the shareholding ratio of managers is helpful to improve internal control quality;The longer duration of incentive can improve internal control quality;The exercise prices is higher than the stock price,the more conducive to the improvement of the internal control quality.