Research On The Effect Of Equity Incentives In Dahua

The equity incentive system emerged in the United States in the 1950 s.With the expansion of the capitalist market,the equity incentive system has been widely used in Europe,Asia and other regions.After decades of exploration,it is found that equity incentive can effectively solve the principal-agent problem in enterprises as a long-term incentive system.In theory,equity incentive is advantageous to the enterprise shareholders and managers to have consistent goal,to allow managers to contribute own strength for the company to make long-term development plan.Although the implementation of equity incentive in China started late,it is gradually maturing in a steady development.When Chinese researchers analyze the effect of equity incentive,it is believed that the implementation of equity incentive can alleviate the agency cost of the company and improve the company’s performance.Due to the ability to motivate managers to improve the company’s performance,equity incentive has been used by domestic and foreign enterprises.According to wind statistics,more and more listed companies have chosen equity incentives to improve company performance.At the end of 2016,524 companies in China have announced and implemented equity incentives,of which private enterprises have grown rapidly.As a leader in the electronic equipment manufacturing industry,Dahua,a large privately-listed company,implemented the restricted stock incentive plan in 2009 and 2013 respectively,so Dahua Stocks was selected to be research object.This paper analyzes the motivation,background and implementation effect of the equity incentive in Dahua stock,and provides reference for other listed companies in the same industry to carry out equity incentive.In this paper,the case study method is used to analyze the incentive case of Dahua stock equity.Firstly,the development course of Dahua stock is analyzed comprehensively,and the company is in good condition.Then,it analyzes the background and motivation of implementing equity incentive in different stages of Dahua stock.Then,through analyzing the financial performance before and after the two equity incentives of the company,the profitability and operation ability of the company’s first equity incentive were found to be significantly improved;the market reaction is much more positive than the second equity incentive.Then,it was concluded that the two restrictive stock incentive plans implemented by Dahua Investment have improved the company’s performance to some extent,and played a key role in helping the company attract and retain talents and talents;at the same time,there are some unreasonable places in the design elements of the incentive plan,and it should be revised continuously with the expansion of the company scale and the improvement of performance to ensure the effective implementation of the incentive.Finally,based on the theory of human capital and incentives,it is suggested that listed companies should comprehensively consider their own circumstances while designing the equity incentive plan,scientifically and rationally set key contract elements,and play a synergistic role in the implementation of management to improve the internal governance of the company and improve other management systems.