An Empirical Study On Equity Incentive And Corporate Performance Of Listed Companies

One of the typical characteristics of modern enterprises is the separation of management and ownership.That is to say,the owner of the enterprise entrusts the enterprise to the professional manager to operate,and only retains the residual claim right and the ultimate control right of the enterprise.In this way,there is a certain information asymmetry between the shareholders and the managers of the enterprise,and the managers of the enterprise may make use of their advantage resources to give priority to satisfying individual interests,thus damaging the interests of shareholders.Under this background,in order to effectively alleviate the contradictions and conflicts between principals and agents,listed companies began to implement equity incentive system within enterprises.Equity incentive system is a kind of employee incentive plan which is often adopted by enterprises in the process of management.By allocating a certain amount of equity to employees,the personal interests of employees and the interests of shareholders are closely linked,thus alleviating the contradiction in the principalagent relationship.In the 1990 s,China's equity incentive policy began to develop.2006 is a milestone in the development of equity incentive policy in China.With the completion of the reform of equity allocation system and the introduction of policies such as "Measures for the Management of Equity Incentive in Listed Companies(Trial Implementation)" and "Trial Measures for the Implementation of Equity Incentive in State-owned Holding Listed Companies(Domestic)",the market environment and political environment of equity incentive system implemented by Listed Companies in China have fundamentally changed in the process of management.At present,in the market economy system of our country,more and more enterprises begin to implement equity incentive system,hoping to alleviate the information asymmetry and incomplete contract caused by principal-agent relationship,better stimulating the potential of human capital and improving the business development ability of enterprises.As to whether equity incentive policy can motivate employees and improve corporate performance,there are two main theoretical hypotheses in academic circles,namely "convergence of interests hypothesis" and "managers' defense hypothesis".On this basis,empirical studies have been carried out on different sides.In view of the fact that the academic research h ave not yet reached a unified conclusion on this topic,we still need to do more relevant research.This paper mainly explores whether the implementation of equity incentive system can really improve the performance of listed companies,and further analyses the heterogeneity of equity incentive system for different types of companies.In addition to the benchmark analysis,we explore the impact of the nature of corporate property rights,the size of the company,the integration of two positions and the degree of marketization of the company's region on the effect of equity incentives.In terms of specific methods,this paper takes A-share listed companies which implement equity incentive plan from 2010 to 2017 as the research object,uses the propensity score matching method and difference in difference method,controlling other incentive means(executive compensation,executive shareholding ratio),focuses on the economic consequences of equity incentive,and empirically tests whether the adoption of equity incentive policy can improve the performance level of Listed Companies in China.Through a large number of empirical analysis,we can see that the implementation of equity incentive system has played a significant role in promoting the development of enterprises.In addition,the role of equity incentive system is heterogeneous.For example,the review and supervision of state-owned enterprises are more stringent,and executives may be more concerned about promoting their positions rather than improving corporate performance,so equity incentives in stateowned enterprises are less effective than non-state-owned enterprises.For example,smaller companies often have imperfect supervisory system and salary system,so the effect of equity incentive is more obvious.Similarly,in a two-position listed company,the chairman and general manager can not supervise each other,which weakens the control of the board of directors to a certain extent.In this case,equity incentives can also play a greater role.In addition,in areas with high level of marketization,various systems are relatively more standardized,managers have less room for earnings management,and the effect of equity incentives is relatively better.This study has important policy implications.In order to better play the role of equity incentive,the regulatory department should strengthen its own governance structure,improve various processes,ensure that the compensation committee has a certain degree of independence in the process of formulating the equity incentive system and implementing specific plans,so as to ensure the fair implementation of the entire system within the enterprise.At the same time,the relevant departments such as the Securities Regulatory Commission should strengthen the supervision of the capital market,strengthen the standardization of the capital market,and promote the effectiveness of the capital market.