Research On The Impact Of Equity Incentive On Corporate Equity Agency Cost Based On The Case Of Jahwa

Equity incentive is an important incentive mechanism of modern enterprises.In many western developed countries,there are more successful practice cases about equity incentives.These successful companies provided positive reference about scheme design and practice.In a long term,the equity incentive plays an important role in lowering the agent cost and improving the corporate performance to company,which is widely affirmed.In our country,with the improvement of the various related systems,the development of the equity incentive has also been further improved.In 2006,‘the management way about the incentive equity of the listed company'(try out)was informed and started formally promulgated.Trial measures stated for the conditions and the scope of the implementation of equity incentive,etc.Since the ‘try out' has been carried out,equity incentive plans increased rapidly in our country.Equity incentive system is increasingly used by listed companies,in order to help the company to motivate employees and accelerate development.But with the development of the equity incentive,the study of equity incentive mechanism by scholars is also more deeply.On the one hand,the study of equity incentive effect by previous scholars more depended on the financial performance to measure the effect of equity incentive to enterprises,less studied from the perspective of agency costs which reduce agency cost or not directly.With the deepening of the research,some scholars have started from the perspective of agency,to study the effect of equity incentive mechanism.On the other hand,in the concrete research of the equity incentive and the agency cost,whether the equity incentive can reduce agency cost or not,researchers appeared different opinions,which is mainly divided into three views.Namely,equity incentive can reduce agency cost,equity incentive leads to agency costs increase,and the equity incentive has no effect on agency costs.There is no unified conclusion,which is deserved further research.The study on the equity incentive and agency cost in the past,empirical study is the main way.In this paper,we use the classic case of equity incentive Jahwa.Jahwa united co.,LTD.(here in after referred to as Jahwa,the company code is 600315.SH),has a very long history in China chemical enterprises,which focus on beauty,personal care,household care which are related tightly to the life.Liushen Florida Water,Herborist and Giving are well known in China which are owned by Jahwa.Jahwa is in the leading position of the industry.And it has been walking in the forefront of the equity incentive practice in our country.After the listing,Jahwa has implemented the equity incentive plan for many times.This paper hopes to study the relationship between equity incentive and agency cost by analyzing the three major equity incentives of Jahwa.This paper first introduced the research background and significance,research ideas and research methods,and made a brief description of the expected contributions and shortcomings.Then analyzed the research on agency cost and the relationship between equity incentive and agency cost.Before the analysis of theoretical basis,the concept of this article was declared.Through the principal-agent theory,equity incentive mechanism of the optimal compensation contract theory,executive rights theory,and two corresponding hypothsis,this paper analyzed the main relationship between the equity incentive and agency cost.Added the development about the equity incentive mechanism in our country,then focused on the three equity incentive plans of Jahwa in the fourth part.Then the first kind of agency cost of Jahwa analyzed from the perspectives of management expense ratio,asset turnover rate and free cash flow,etc.And the second type of equity agency cost analyzed from the distribution of dividends,the occupation of large shareholders,and related transactions.Finally,this paper summarized the research results of the relationship between equity incentive and agency cost,in order to provide useful suggestions for the improvement of equity incentive in China.