The Research Of Equity Incentive Effect From The Perspective Of Embezzlement By Large Shareholder

The “Equity Incentive” is a system produced in Western capital market.It has a history of nearly two decades in China.The purpose of the theory was to reduce the agency cost between the owners and the managers.However,the ownership structure in China is apparently different from Western capital markets.The structure of shareholding in Chinese listed company is highly concentrated.Under the background,will the effect of equity incentives be affected by the ownership structure?The study of “Equity Incentive affection” refers to the process that the manager's responding of the policy,then transmitting his decisions to the company's performance.Under the background in China,the large shareholder will commit embezzlement against his company and small shareholders,seeking for private benefits.The behavior of managers will be affected by large shareholders.The paper is based on three roles in the governance of listed companies: large shareholders,managers,small shareholders.The conflict between the three roles cause different behaviors of executives in corporate governance.The “Equity Incentives” is a measure to improve governance issues,however,It may fail under the influence of embezzlement by shareholders.The paper designs empirical researches to examining the relationship between shareholder's embezzlement and manager incentive.Through empirical research and analysis,the main conclusions are as follows:The first one,the paper verifies the embezzlement by large shareholders in market.The second one,the paper verifies large shareholder's behavior inhibits the effects of“Equity Incentive”;The last one,under the influence of embezzlement,“Equity Incentive” is invalid.