Research On The Impact Of Equity Incentives On Corporate Performance

Since 2005,the number of listed companies in China implementing equity incentives has been increasing,and equity incentives have become an important tool for improving corporate performance.In December 2021,the CSRC issued the Measures for the Administration of Equity Incentives for Listed Companies,elucidating and elucidating the general stipulations of equity incentives for listed companies,as well as the implementation processes,data disclosure,etc.In recent years,due to the effects of both internal and external factors,many listed companies have declared the failure of equity incentive,making it clear that there are still numerous issues that must be addressed in the implementation of equity incentive for Chinese enterprises,which will have a lasting effect on their long-term growth.The home appliance industry,a reflection of China’s manufacturing industry and a symbol of the nation’s prosperity,has seen the most equity incentive implemented in the industry.This has been a topic of academic research since the beginning,and its effect on the performance of manufacturing firms is still a hot topic.From an industry distribution standpoint,this is a testament to the strength of China’s economic development.Based on the above background,this paper selects Jiu Yang,a representative company in the home appliance industry,as the case study.Jiu Yang has conducted four equity incentives and has rich experience in equity incentives.The study of the experience of Jiu Yang’s equity incentive from failure to success and how equity incentive affects corporate performance in this process can provide some reference for other companies.This paper begins by outlining the background and importance of the study,introducing the academic advances and theoretical bases of corporate performance and equity incentives both domestically and internationally;then,it presents the profile of Jiu Yang and examines the impetus and formation process of equity incentives implemented by Jiu Yang.Lastly,it evaluates the short-term market responses of equity incentives of Jiu Yang in 2014 and 2018,combining the industry.An analysis of the influence of equity incentives on both financial and non-financial performance between 2012-2021 is conducted both horizontally and vertically,taking into account industry averages;a plan for enhancing Jiu Yang’s corporate performance,based on the equity incentive program’s design,is then proposed.Results of the case study,and conclusions are drawn in conjunction with the study.Jiu Yang’s subsequent equity incentives,following the unsuccessful one in 2011,have been found to have had a beneficial effect on corporate performance.The market’s short-term reactions to the two equity incentives have been observed to be positive.in 2014 and 2018,which are the main studies of this paper,have performed well;the performance of each indicator aspect in terms of financial performance is slightly different,but the overall development is positive;the non-financial performance of the employee structure continues to be excellent and the innovation ability is further improved.This paper’s conclusion is that,to effectively implement an equity incentive program and capitalize on its positive effect on corporate performance,enterprises must consider the industry characteristics,corporate reality,incentive model,validity period,assessment conditions,and other elements in a unified fashion to ensure the program’s long-term success.