Equity Incentive And Corporate Performance

Modern enterprise is a system in which shareholders own enterprises and managers run enterprises.The relationship between employment and employment is principal-agent relationship.But because they belong to non-community of interests,in order to maximize their respective interests,shareholders and managers have the agency problem.Its main manifestation is that managers use their positions to make on-the-job consumption,and the high agency cost seriously damages the business performance of enterprises.As an important internal governance way to solve the principal-agent problem,equity incentive aims to achieve incentive compatibility through reasonable benefit distribution,and ultimately reduce the agency cost of listed companies and improve the performance of listed companies.However,after collecting a large number of financial data of listed companies,this paper analyzes the principalagent problem and the status quo of equity incentives of Listed Companies in China.It is found that the listed companies in China still have the following problems: on the one hand,the unreasonable ownership structure and independent director system and the serious insider control make the agency cost further increase;on the other hand,there are still few listed companies that implement equity incentives,and the incentive methods and stock sources of equity incentives are single,and the incentive intensity is generally low.Many problems.At the same time,after consulting a large number of research literature,this paper finds that although the existing literature on these three aspects has achieved fruitful results,the literature on equity incentives and corporate performance from the perspective of agency cost is insufficient,and the research conclusions are inconsistent.Therefore,this paper focuses on: first,the impact of agency costs on corporate performance;second,the impact of equity incentives on agency costs and corporate performance.Firstly,this paper chooses the financial data of Listed Companies in China which have implemented equity incentives from 2006 to 2016 as samples.There are two main bases: first,in 2005,China produced the first formal document on equity incentive,which clearly defined the elements of equity incentive for listed companies for the first time.Since then,the number of listed companies using equity incentive to motivate managers has begun to increase.Secondly,as a long-term governance mechanism,equity incentive generally takes 4-5 years to implement.This paper chooses 11-year panel data to measure the effect of equity incentives more accurately.Secondly,on the basis of theoretical analysis,this paper puts forward three basic assumptions.After reading a lot of literature,three regression models were established by selecting relevant variables.The regression models were empirically analyzed by descriptive statistical analysis,correlation test,multiple linear regression,robustness test and other measurement tools.Finally,the empirical results show that:(1)there is a significant reverse relationship between agency cost and corporate performance,that is,the increase of agency cost significantly reduces corporate performance of listed companies;(2)equity incentive is negatively correlated with agency cost,and equity incentive is an effective means to suppress agency cost;(3)equity incentive is positively correlated with corporate performance,and equity incentive is effective.Improve company performance.Comprehensive analysis of the current situation and empirical research of the three,in order to improve the effect of equity incentives,improve the corporate governance system of listed companies,further reduce the agency costs of listed companies,improve corporate performance.This paper puts forward the following policy recommendations: first,improve laws and regulations and China's capital market;second,improve the governance structure of listed companies;third,improve the information disclosure system;fourth,the combination of various equity incentive modes;fifth,arrange equity incentive intensity scientifically and rationally.