The Impact Of Equity Incentives On Corporate Value

In the early 1990s,equity incentives were introduced into our country as a long-term governance mechanism.After more than 30 years of development,equity incentives in our country have gradually entered into a standardized stage.Since 2006,the number of listed companies that have implemented equity incentives has been increasing.But whether equity incentives can increase corporate value remains to be studied,in order to verify the impact of equity incentives on corporate value,this paper carry out a series of studies enriching the research of equity incentives and corporate value,and provide targeted reference opinions to formulate equity incentives.Chinese A-share listed companies are chosen as the object in this paper by combing the proposed literature.The aim is to examine the influence of equity incentives on the company’s value,explore various scheme designs and implementation methods that can more effectively enhance corporate value.This study finds that:(a)The value creation of enterprises can be significantly promoted by the implementation of equity incentives;(b)Promoting the value creation of enterprises can be more effectively in those companies which face with harder agency conflicts,that is to say,in some extent,the trouble caused by agency conflicts can be recouped via implementing the equity incentives;(c)In terms of incentive objects,the equity incentives implemented by companies that pay more attention to executives are more economical;in terms of incentive targets,the use of restricted stocks,especially the equity incentives implemented by companies that use both restricted stocks and stock options are more effective;in terms of incentive intensity,the equity incentives implemented with greater intensity is more economical;in terms of the times and continuity,repeated and continuous implementation of equity incentives can more effectively improve the company value.After summarizing the previous researches,this paper provides targeted recommendations for the implementation of equity incentives in my country,and the limitations and the direction in the future work are also put forward.