A Study On The Impact Of Equity Incentives On Corporate Performance

The CSRC issued the Measures for the Administration of Equity Incentives for Listed Companies(for Trial Implementation)and the Measures for the Administration of Equity Incentives for Listed Companies in 2005 and 2016,respectively,to provide policy support for Chinese companies to implement equity incentives.In this form,it is more convenient for enterprises to raise capital than before,and the simplification of ownership transfer procedures makes the separation of ownership and management rights.However,it brought about the urgent problems of rising agency costs and serious brain drain,and equity incentive plans were born to solve these problems.An equity incentive plan is an incentive-based grant of equity in a company to connect the interests of executives and shareholders,so that executives can manage the company and develop strategies with the overall and long-term interests of the company in mind.Equity incentives are a long-term incentive used by companies to encourage and attract key personnel,and are one of the most common forms of incentives within companies.Therefore,equity incentive is a conditional allocation of part of the company’s equity to executives or ordinary employees,thus reducing the conflict between the company’s shareholders and executives,executives and ordinary employees,and the intermediary relationship between the interests of major shareholders and minority shareholders,thus achieving the long-term business goals of the company.Based on the literature research and basic theory,this paper firstly analyzes the mechanism path between equity incentive and corporate performance,based on which TCL Technology Company is selected as a case study.The case study introduces the basic situation and operating business of TCL Technologies,and analyzes the program and implementation characteristics of two equity incentive plans during 2018-2019,after which the impact of TCL Technologies on corporate performance in the equity incentive plan is studied.Firstly,it attracts investors to enter and triggers a turnaround in market performance;secondly,it makes management and company interests bundled and promotes improved development prospects;thirdly,it increases management risk-taking,which in turn enhances the company’s innovation output;and finally,it makes the company optimize innovation efficiency by increasing the innovation motivation of core technical backbone.The effect of equity incentive on corporate performance of TCL Technologies is analyzed from four aspects: market performance,financial performance,innovation output and innovation efficiency.Finally,specific recommendations are given for the study of the effect of equity incentive on corporate performance of TCL Technologies.It is expected to provide reference and reference experience for similar enterprises in the technology industry,so that they can make reasonable use of equity incentives to increase corporate performance and help future development..