The Impact Of Equity Incentives On Firm Performance

As a huge ship in the wave of the world economy,the Chinese economy has been able to set off huge waves in the world economy in the process of continuous opening up and progress.From the Sino-US trade war started last year,we can clearly see that China is Growth in the international political and economic arena.However,due to China’s late open economic exchanges with the world,it still belongs to "newcomers" in the capital industry.The effectiveness of China’s capital market still has a certain distance from the developed countries in the world.As far as the current market is concerned,China’s capital market There are still many companies that are overvalued and undervalued.Since the reform and opening up 40 years ago,China’s capital market has gradually shifted from a corporate system to a shareholding system.Enterprises have changed from "one-person enterprises" to"more people’s enterprises",but at the same time,internal corporate governance problems have arisen.Preventing and controlling unfavorable situations within the enterprise,the theory of "separation of the two powers" was born,and the company separated the ownership and management rights,so that the two parties would mutually divert the shareholders to delegate the power to the management,so that the professional people were responsible for the professional.thing.The reason why shareholders do this is very clear,in order to achieve the same goal as the business objectives,to maximize the effect of shareholders’ profits.However,people have discovered that the separation of the two powers is indeed effective in regulating the internal control system in the enterprise,but it is followed by the information asymmetry between the company’s shareholders and management and the generation of agency costs.The interests of both parties are likely to have an impact on the overall value of the company.Therefore,in order to make the interests of the company and the management team peacefully solve the problem of interest,the two goals will be unified,and the two will be stabilized in the long run.The conflict of interest,equity incentives came into being in the business process.China’s GEM market is similar to the US NASDAQ securities market.It was set up for the financing of SMEs.In the process of establishing nearly 10 years,the GEM market is absorbing the main board market of Shanghai and Shenzhen stock markets.Good development has played a positive role.With the gradual maturity of the GEM market,in recent years,companies in the GEM market have a preference for equity incentives,and the implementation is extremely hot.In this context,it is worthwhile to study whether equity incentives are worth implementing and whether they are suitable for the GEM market.Implementation or deeper,for the newly launched "hard-core" as the core of the "unicorn" enterprise’s science and technology board market can play a certain reference role,have a certain practical significance.Therefore,through the combination of theoretical research and empirical analysis,this paper synthesizes the characteristics of listed companies in China’s Growth Enterprise Market and studies the impact of equity incentives on corporate performance.After studying the results of domestic and foreign scholars,this paper argues that equity incentives have a positive and facilitative effect on corporate performance.First,when the company implements equity incentives,it will stimulate the management’s enthusiasm and enhance the sense of belonging of the management,which will reduce the possibility that the management will harm the long-term interests of the shareholders of the company for the short-term interests of the individual,so as to achieve the purpose of enhancing the future value of the company In order to explain this conclusion more forcefully,this paper selects the listed company data of the normal operation of the GEM in the four years from 2014 to 2017.Through panel screening and sorting,the panel data is made and the panel model regression method is used for empirical analysis.Taking into account the difference between China’s GEM market and foreign mature capital markets,the financial indicators return on equity(ROE)is selected as the explanatory variable to measure the company’s performance and whether the company implements equity incentive(DIV)as Explain the dummy variables of the variables,select the equity incentive ratio(MSR)and the management shareholding ratio(MHR)as explanatory variables,and comprehensively consider various indicators that may affect the performance of the enterprise,and select the annual salary(MIS)and equity concentration of the executives.A panel regression model was established by using(COO),company size(SIZE),capital structure(CS),and intangible assets as a percentage of total assets(RDTA)as control variables.Descriptive statistical analysis,ADF-Fisher test、PP-Fisher test,Kao cointegration test,correlation test,multi-collinearity test,T test and F test were analyzed by Stata15 statistical software.Finally,the model was verified by model test analysis.There is a positive correlation between the implementation of equity incentives and corporate performance in GEM listed companies,and the positive correlation is significant from the regression results.After the conclusion of the theoretical and empirical analysis,this paper puts forward some suggestions for the implementation of the equity incentive mechanism of China’s GEM listed companies.Through the continuous improvement of the capital market system and the reasonable implementation of the equity incentive mechanism,we find the equity incentives suitable for the company.The mechanism,equity incentives will play its due role in the enterprise,and the GEM listed companies can better enhance the future value of the enterprise.