A Research On The Lasting Effect Of Equity Incentive By Propensity Score Matching

Under the modern enterprise system background,the principal-agent problem under the separation of ownership right and management right is the characteristic of a mature company,and is also one of the core issues faced by modern mature enterprises.As an incentive tool,equity incentive is generally in a position to appeal on excellent talents actively participate in business decisions also lessen their opportunistic behavior,to coordinate the interests of shareholders,agents and companies,also to meet the long-term development requirements of enterprises.The original intention of equity incentive design is to encourage long-term value creation for enterprises,therefore,the ultimate goal needs to be carried out to the continued growth of performance.However,the practical implementation of equity incentive is often presented as a strong incentive effect in the early implementation,but in the middle and later stages,there are different degrees of weakening or deviation,and even it has evolved into a tough new problem.This study takes equity incentive as the principal line,based on the implementation of equity incentive in China,also combined with literature research.We assumed that equity incentive has incentive effect,but there is a timeliness of it,with the longer term,the effect of equity incentive presents a decreasing trend,and the possibility to realize the contract goal becomes smaller.We synthesize realistic and theoretical background to explore whether the effect of equity incentive is really accord with its original intention of the design,that is,whether the incentive utility is effective for a long time,and then we plan to carry out an in-depth study on this issue.The continuity study establishes the internal logic relationship from three aspects on the dynamic tuning of equity incentive scheme,the incentive structure which can be said to be the complementary role of different incentive modes,and the emotional dependence of the executive.Aiming at research problem,the listed company in A-Share market during 2010-2015 were divided into two groups,we take 225 domestic listed company samples including 1350 panel data as incentive group and 2811 samples including 16866 panel data as unmotivated group used for matching.Using Propensity Score Matching(PSM)and panel data model to approach studying contents.The results suggest that,comparing to the samples without equity incentive,the performances of firms which put the equity incentives into practice are better,but no longer always effective.From the further study on it,we find that the equity incentive scheme associated with dynamic adjustment exhibits a better incentive effect and persistence,however,there is no conclusion in the study of the numbers of adjustment.And the conclusion also applies equally to overpay and dismissal threat which have positive complementary effects on equity incentive continuous utility.Also,different from state-owned listed companies,duality of chairman and general manager in private listed companies is an effective management structure,and executives have high emotional dependence on corporate performance which can strengthen the effect of equity incentive,also reduces the possibility of diminished in the future.