Equity Incentive,Risking Taking And Capital Allocation Efficiency In State-Owned Enterprise

The outline of the 14 th Five-Year Plan proposed to improve the market-based compensation distribution mechanism,support more State-Owned enterprises to flexibly use medium and long-term incentive policies such as equity incentives for state-owned listed companies,equity incentives for state-owned scientific and technological enterprises,and dividend incentives to stimulate the endogenous vitality and competitiveness of enterprises.Therefore,the research on the implementation effect of state-owned enterprise equity has been widely concerned by the academic and business circles.Equity incentive,as a long-term incentive tool for enterprises,can help managers overcome risk aversion and improve their tolerance for short-term failure,so as to focus on investment projects with higher risk but higher net present value,which may play a role in optimizing state-owned capital allocation.Under the strong advocacy of SASAC,more and more state-owned enterprises actively explore the mode of equity incentive.However,can state-owned enterprises that implement equity incentive really improve the efficiency of state-owned capital allocation? Does the implementation of equity incentive enhance the level of enterprise risk-taking?And whether risk-taking plays a mediating role in the influence of equity incentive on state-owned capital allocation? This series of problems has not reached a unified conclusion.This paper takes the shanghai-Shenzhen A-share state-controlled listed companies that implemented equity incentive from 2010 to 2020 as the research samples,and examines the impact of equity incentive on the efficiency of state-owned capital allocation and the transmission mechanism of risk-taking as an intermediary.In the further research,the key elements of equity incentive contract are selected to test the influence of different schemes on the capital allocation efficiency of state-owned enterprises.In terms of the selection of main variables,Richardson’s(2006)residual model is used to quantify the efficiency of capital allocation of state-owned enterprises.After the variables are processed,the hypotheses are tested by regression analysis and the final conclusions are drawn.This paper draws the following conclusions through empirical tests:(1)The implementation of equity incentive in state-owned enterprises can improve inefficient investment,and further regression shows that the implementation of equity incentive can alleviate the under-investment of state-owned enterprises,but can not restrain the phenomenon of over-investment of enterprises.(2)The implementation of equity incentive in state-owned enterprises can effectively overcome the risk aversion of senior executives and improve the level of enterprise risk-taking.(3)Risk-taking plays a full mediating role in the mechanism of equity incentive affecting inefficient investment,and plays a partial mediating role in the mechanism of influencing insufficient state-owned capital investment.(4)In the analysis of the heterogeneity of contract elements,as far as the factors of equity incentive contract are concerned,the utility of stock option is better than restricted stock in alleviating the inefficient investment of state-owned enterprises,but restricted stock is better in alleviating the underinvestment.The greater the incentive,the more effective it is to alleviate the inefficient investment of state-owned enterprises.Under the condition of strict performance index assessment,equity incentive inhibits the improvement of state-owned capital allocation efficiency.In order to give full play to the incentive effect of state-owned enterprises’ equity incentive,on the one hand,we should pay attention to the role of risk-taking in its transmission mechanism,improve the tolerance of short-term failure of senior executives,and encourage senior executives to carry out risky investment activities;On the other hand,the contract plan should be optimized and tailored according to the current development situation of the enterprise,so that senior executives can feel the incentive while reasonably setting performance assessment indicators.