Research On Financial Performance Under Equity Incentive Of Tinci Materials

With the widespread implementation of equity incentives in China,the optimization of equity incentive programs and related systems is particularly important.Since there are few failed equity incentive cases in various industries,it is necessary to conduct a case study on the financial performance of equity incentive programs due to the differences in the industry environment and development stage of each company.In this paper,we take the leading electrolyte company Tinci Materials as an example,and focus on analyzing and evaluating its short-and medium-and long-term financial performance before and after the equity incentive,identifying its strengths and weaknesses and proposing targeted measures to address them,with a view to providing some reference for other companies in the industry.By combing the related literature,we analyze and evaluate the financial performance of Tinci Material under the equity incentive by using principal-agent theory,human capital theory and incentive theory.First,the basic situation of Tinci Materials and the motivation of implementing equity incentives are introduced.Secondly,a comparative analysis is conducted based on the contents of four equity incentive cases of Tinci Materials.Again,the event study method was used to calculate the excess return and cumulative excess return during the event period of each of Tinci Material’s equity incentives.The calculation results showed that the first two equity incentives of Tinci Material had obvious positive stimulation on short-term financial performance,while the incentive effect of the last two was slightly insufficient.Then,the financial index method was used to compare the solvency,profitability,operating capacity and development capacity of Tinci Material before and after the equity incentive,and the results showed that the medium and long-term financial performance of Tinci Material improved significantly after the equity incentive.Finally,the strengths and weaknesses of the financial performance of Tinci Material under the equity incentive are comprehensively evaluated,and solutions are proposed for the problems.The shortcomings of Tinci Material’s financial performance under equity incentive include unsound performance evaluation system,short validity period of equity incentive,and the tendency of welfare of equity incentive plan.Therefore,Tinci Material should set scientific evaluation indexes,improve index evaluation system,extend the validity period of equity incentive,establish long-term incentive mechanism,strengthen information disclosure system,and improve internal supervision system,so as to make up for the shortcomings.