The Influence Of Equity Incentives On Cash Dividend Distribution

The characteristic of the modern enterprise system is that the owner transfers the management right to the manager,and the ownership and the management right are separated.This results in the issue of entrusted agency.Some scholars believe that managers can be motivated and supervised by signing compensation contracts.In this way,managers can link their own long-term interests with the interests of the company and reduce the cost of entrusted agency.The generation of equity incentives is based on this situation.Since the “Measures for the Management of Listed Companies' Equity Incentives(Trial)” was introduced in 2005,listed companies in China have also begun to implement equity incentive plans widely.However,some scholars believe that the utility of equity incentives is not optimistic.Managers may use their own power to seek welfare,which harms the interests of shareholders and the company.Based on the perspective of income distribution,this paper studies the effect of equity incentive on the cash dividend distribution to test whether the company's managers will use their power to indirectly boost their own profits by controlling the distribution of cash dividend.Therefore,we can explore the effects of equity incentive and provide more reasonable suggestions for improving corporate governance.This article selects the listed companies on GEM with the highest enthusiasm for equity incentive as the samples,adopts a combination of theoretical analysis and empirical test,and discusses the effect of the company's cash dividend distribution.from the aspects of implement equity incentive or not,the degree of equity incentive and equity incentive model.After a study,we found that: Firstly,compared with companies that have not implemented equity incentives,companies that implement equity incentives are more likely to reduce the distribution of cash dividends.Secondly,among the companies that implemented equity incentives,different degree of equity incentives have different effects on the distribution of cash dividends.Companies with higher degree of equity incentives have lower levels of cash dividend distribution.Finally,among the companies that implement equity incentives,different types of equity incentives also have different effects on the distribution of cash dividends.Compared with companies adopting a restricted stock incentive model,companies using the stock option incentive model has lower level of cash dividend distribution.Based on the research of the relationship between equity incentives and cash dividend distribution,this paper hopes to provide a reference for listed companies on GEM to formulate scientific and reasonable equity incentive plans and improve the effectiveness of equity incentives.