Executive Equity Incentive And Stock Price Crash Risk

China's capital market has been established for a short time,all aspects of the system are still in a sound state,the development of the capital market is not perfect,and the information environment is relatively poor,so China's capital market may be more prone to the risk of stock price crash than other developed countries.As an extreme market reaction,the stock price crash will have a bad impact on the capital market,seriously hit the investors' investment confidence,and is not conducive to the healthy and stable development of the capital market.Only by understanding the root causes of the risk of stock price can we better curb it.In 2008,the occurrence of the stock disaster made the academia pay more attention to the risk of stock price crash.At present,the "information hiding hypothesis" is the cause of the risk of stock price crash recognized by the academia,that is the management will conduct information management based on self-interest behavior,hide bad news and disclose good news.When the bad news accumulates in the company and reaches the threshold,the management is not willing to pay more costs to hide When the bad news is hidden,the bad news accumulated inside the company will flow into the market,which will cause a huge impact on the company's stock price in a short period of time and lead to the risk of stock price crash.From this we can see that the management based on some self-interest,such as salary,personal reputation,career,etc.,will carry out information management of the company,which may lead to the risk of stock price crash.Equity incentive,as a compensation mechanism to balance agency contradictions,has been adopted by more and more enterprises in our country,but the effect has not reached the expectation.The study found that the implementation of equity incentive for executives may induce earnings management and information manipulation behavior of executives.Therefore,this paper considers whether the compensation temptation brought by equity incentive to executives will lead to information management based on self-interest behavior,hide bad news and lead to the risk of stock price crash.This paper takes the listed companies that implemented the executive equity incentive plan from 2006 to 2017 as the research sample to study whether the intensity of executive equity incentive will increase the risk of stock price crash,and further study the regulatory effect of different ownership concentration and different management power on the impact mechanism of the two under different governance structures,so as to contribute to the stock of enterprises The formulation of the right incentive plan provides certain reference significance.The main contents of this paper are as follows:the first part is the introduction.This part mainly introduces the background of the problem research,puts forward the research objectives and contents of this paper,as well as the possible innovations of this paper.Then there is the literature review.This part introduces the previous related research,the related research on the risk factors of stock price crash,the related research on the economic consequences of equity incentive,and the related research between the two,and makes a comprehensive review of the above literature,puts forward the main points,and finds a new foothold on the basis of the existing research.The third part is the theoretical basis and research hypothesis.It mainly expounds the relevant theoretical basis to support the hypothesis,and puts forward the research hypothesis based on the existing theory.The fourth part is the model design,this part mainly elaborates the sample data source and processing process,the introduction and measurement method of key variables,and finally proposes the empirical model according to the hypothesis of this paper.The fifth part is the empirical results.In this part,STATA is used to make descriptive statistics and correlation analysis of variables,then empirical model is used to verify the research hypothesis,and finally robustness test is used to verify the reliability of this conclusion.The last part is the conclusion and policy proposal,which summarizes the conclusions from empirical analysis and puts forward relevant policy suggestions.In this paper,we find that there is a positive correlation between the intensity of executive equity incentive and the risk of stock price collapse,that is to say,the greater the intensity of executive equity incentive,the more likely it is to increase the risk of stock price crash.And through further research,we find that in the listed companies with high degree of information opacity,the positive relationship between equity incentive and the risk of stock price crash will be more obvious.This paper further introduces the regulatory variable of management power,through group regression,finds that the coefficient of incentive intensity of executives with higher management power is significantly higher than that with lower management power,which shows that when the management power is larger,the executives will have the free choice of information management and disclosure,and the executives may carry out the exercise of equity incentive conditions Information manipulation can hide bad news and increase the risk of stock price crash.In addition to the adjustment variable of large shareholder shareholding,the study found that the equity incentive coefficient of the group with higher proportion of large shareholder shareholding is significantly higher than that of the group with lower proportion of large shareholder shareholding,and the "tunneling effect" of large shareholder is verified,which shows that in the company with higher concentration of equity,large shareholder may use equity incentive to redeem senior executives and collude with senior executives to damage the interests of the company.At this time,it will lead to equity incentive more inclined to welfare type and can not play a better incentive effect.The conditions and threshold of exercise are relatively low,which is easy to stimulate executives' short-term manipulation and increase the risk of stock price crash.The main innovations of this paper are as follows:first,there are relatively few studies on equity incentive and risk of stock price crash,while this paper focuses on the relationship between equity incentive and risk of stock price crash,rather than the simple study of equity incentive(including equity incentive and employee equity incentive),because as an important decision maker of the company,the management should implement the equity incentive to the executives In equity incentive,executives have the ability to engage in opportunistic behavior of information disclosure and achieve the conditions of equity incentive.Therefore,it is more meaningful to study the relationship between executive equity incentive and the risk of stock price crash.Secondly,this paper introduces two regulatory variables:large shareholder holding and management power to further refine the impact of equity incentive and the risk of stock price crash,and studies the change of the impact mechanism between the intensity of executive equity incentive and the risk of stock price crash under different governance structures.