Research On Equity Incentive In Family Enterprises

As the most traditional and common corporate organization form,family business plays an indispensable role in the economic construction of every country and region in the world,and our country is no exception.After decades of rapid development after marketization,Chinese family enterprises have gradually developed into the core force of China’s social and economic development,but at the same time,Chinese family enterprises are facing an important test of their governance ability brought by the gradual maturity and perfection of the market economy.In this context,our family business has accelerated the pace of introducing modern management model.Equity incentive is an effective means to combine modern management mode with traditional family management.However,the equity incentive implemented by family enterprises has its particularity.The combination of ownership and control right of family enterprises and the special governance structure that the family control right of the company is greater than the cash flow right make it more likely to produce some problems in the design and implementation of equity incentive scheme,such as self-seeking welfare,interest transmission and damage to the interests of small and medium investors.Therefore,this paper studies the scheme design and implementation effect of equity incentive in family enterprises,which can provide reference for the design and implementation of equity incentive in family enterprises,the supervision of relevant departments and investors’ evaluation of equity incentive schemes in family enterprises while enriching the existing research.This paper mainly compares the equity incentive schemes of family enterprises and non-family enterprises in the household appliance industry and selects two types of companies in the household appliance industry,one is a well-known family enterprise,the other is a well-known non-family enterprise,and compares the characteristics of the exercise conditions and incentive objects set by the equity incentive schemes implemented by these enterprises.By analyzing various factors that affect the design of equity incentive scheme in family enterprises,the characteristics of equity incentive scheme design in family enterprises are obtained.Moreover,Vatti,a typical listed family enterprise,is selected as the research object to conduct a specific case study on its equity incentive plans implemented in 2016 and 2018.Through the study of its scheme design and implementation effect,the research conclusion is obtained.Through the above research,it is concluded that among the factors affecting the design of equity incentive scheme of family enterprises,there are not only the negative motivation of family’s hollowing out of the listed company,but also the motivation of improving the company’s performance,the motivation of attracting and retaining technical professionals and the positive motivation of boosting the stock price.The stock incentive mode of Chinese family business is mainly restricted stock incentive,subject matter source is mainly oriented additional issuance.Compared with non-family enterprises,the number of equity incentive objects in Chinese family enterprises is smaller,and the granting of rights is more inclined to senior executives,so the exercise conditions are often more strict.Generally speaking,equity incentive of Chinese family business conforms to the characteristics of welfare equity incentive from the perspective of incentive object.From the perspective of exercise conditions,it also shows the characteristics of incentive type equity incentive,which shows the characteristics of diversification motivation.The equity incentive plan implemented by Vatti in 2016 played a positive role in improving the company’s profitability,short-term solvency,operating capacity and development capacity,while the equity incentive plan in2018 was basically the opposite and played a negative role in the company’s financial performance.Both of the two equity incentives played a role in promoting the improvement of R&D and innovation ability,attracting outstanding talents and boosting stock prices in the short term,but they did not play a sufficient role in improving the stability of management and affecting the long-term stock price.The main contributions of this paper are as follows: First,from the perspective of research,there are few studies on the differences in the design of equity incentive schemes between family enterprises and non-family enterprises in the previous literature.By comparing the design schemes of equity incentive implemented by typical family enterprises and non-family enterprises in the same industry,this paper finds out the diversified motivations of equity incentive implemented by family enterprises.Then this paper can enrich the current family business equity incentive related literature from a certain level.Second,in terms of research methods,this paper analyzes the implementation effect of the equity incentive scheme of family enterprises from two aspects of financial performance and non-financial performance,including the analysis of research and development innovation ability,the analysis of the effect of attracting and retaining talents and other aspects rarely involved in the previous literature,which is conducive to a more comprehensive evaluation of the implementation effect.Thirdly,in terms of the research object,Vatti,the selected research object of this paper,is a family enterprise with stable development for many years,and its corporate governance structure and ownership structure are relatively stable.The equity incentive programs implemented in 2016 and 2018 provide an excellent case study for this paper and a case basis for the research of equity incentive in family enterprises.