Research On The Impact Of Equity Incentives On Enterprise Risk-Taking

The report of the 19 th National Congress of the Communist Party of China pointed out that we should build a scientific executive compensation system to ensure China’s "cultivation of world-class enterprises with global competitiveness".As the core means to improve the enterprise compensation system and an important link to stimulate the vitality of micro subjects,equity incentive has been rapidly implemented in China’s listed companies since the implementation of the administrative measures for equity incentive of listed companies(Trial Implementation)in 2006.Especially in the context of deepening the reform of mixed ownership at this stage,the implementation of equity incentive has ushered in a new opportunity.At present,China is in the period of new economic transformation.The reasonable risk-taking activities and risk-taking behavior of enterprises can enable enterprises to fully grasp all investment opportunities and convey the positive and enterprising signal to the market,which is conducive to their long-term development and value enhancement.Therefore,the effect of equity incentive on enterprise risk-taking has been concerned by academia and business circles.What is the impact of equity incentives on the level of enterprise risk-taking? What impact will different settings of equity incentive contract elements have on the relationship between them? How does equity incentive affect the risk-taking level of enterprises? What are the different effects of equity incentives on enterprise risk-taking when enterprises with different growth,property rights and competition degrees implement equity incentives? A unified conclusion has not yet been reached on this series of problems.From an empirical point of view,this paper selects the listed companies that implemented equity incentives in Shanghai and Shenzhen A-share markets from 2010 to 2020 as the research object,analyzes the panel data using the multi time point double difference model,tests the impact of equity incentives on enterprise risk-taking and the impact of different contractual elements on the relationship between the two,and tests the impact mechanism of equity incentives on enterprise risk-taking,enterprise growth The influence of the nature of property rights and the degree of competition on the relationship between them.The main conclusions of this paper are as follows: first,equity incentive improves the level of risk-taking by reducing the principal-agent problem.Second,the different settings of equity incentive contract elements will affect its effect on enterprise risk-taking.When the incentive mode is restricted stock,the source of incentives is directional issuance,and the performance evaluation conditions are loose,equity incentive has a greater impact on enterprise risk-taking.Third,the effect of equity incentive on enterprise risk-taking is mainly achieved by affecting the cash holding and investment R & D level in enterprise financial decisions,as well as the mergers and acquisitions and business concentration in business decisions.At the same time,the nature of different enterprises will have an impact on the relationship between the two.The higher the growth of enterprises,the less intense the competition,and the equity incentive of non-state-owned enterprises have a more significant impact on enterprise risk-taking.According to the conclusions,this paper puts forward the following policy recommendations: first,the government should improve the relevant system of equity incentive;Second,enterprises should actively promote equity incentives and scientifically set key contract elements;Enterprises should reasonably carry out equity incentives in combination with their own development needs and internal and external environmental characteristics.