The Influence of Equity Incentive and its Concentration Degree on Enterprise Investment Efficiency

Yuxin Sun

doi:10.62051/vol3pp46-55

Authors

Yuxin Sun

DOI:

https://doi.org/10.62051/vol3pp46-55

Keywords:

Executive Equity Incentive; Core Technical Personnel Equity Incentive; Investment Efficiency; Equity Concentration.

Abstract

As an important part of China's modern industrial system, high-tech industry has long-term inefficient investment problems due to the characteristics of high investment demand, high risk and long cycle. As an incentive and constraint mechanism based on the principal-agent theory, equity incentive can effectively reduce the agency cost and improve the investment efficiency of enterprises. Based on the different perspective of equity incentive between senior executives and core technical personnel, this paper takes the sample of equity incentive in 2018-2022 to test the impact of equity incentive on the investment efficiency of enterprises. The results show that equity incentive can effectively improve the investment efficiency, alleviate the investment shortage and restrain the excessive investment; equity concentration plays a negative effect on the relationship between equity incentive and enterprise investment efficiency; compared with executive equity incentives, core technical personnel equity incentives have a more significant effect on improving investment efficiency, Therefore, enterprises should pay attention to improving the level of equity incentive; focus on the influence of equity structure on the utility of equity incentive and prevent excessive equity concentration; when designing equity incentive plans, focus on incentivizing core technical personnel.

Downloads

Download data is not yet available.

References

JC Stein, et al. Agency, Information and Corporate Investment. Handbook of the Economics of Finance. (2003) p. 111-165.

Youtang Zhang, Yuming Chang, et al. Empirical test of the impact of digital finance on the investment efficiency of science and technology enterprises. Statistics and Decision-making. Vol. 36(2020) No. 16, p. 179-183.

Myers, S.C.& Majluf, N.S, et al. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics. Vol. 13(1984) No. 2, p. 187-221.

Fuyan Luo, Zhonghua Shen, et al. Equity incentive, agency cost and enterprise investment efficiency. Finance and Trade Research. Vol. 24(2013) No. 02, p. 146-156.

Fubi Luo, Maosheng Ran, Jiating Du, et al. Empirical research on the relationship between equity incentive and investment decision-making for senior executives. Accounting Research. (2008) No. 8, p. 69-76.

Yingjiang Jie, Shuo Yang, et al. Study on the impact of executive equity incentive on corporate investment level --An evidence from listed companies in the high-tech industry. Science and Technology Management Research. Vol. 32(2012) No. 20, p.148-152.

Changjiang Lv, Haiping Zhang, et al. The impact of the equity incentive plan on the company's investment behavior. Management World. (2011) No. 11, p. 118-126.

Zhanxia Wu, et al. Analysis on the influence of equity incentive system on investment efficiency of listed companies in China. Productivity Research. (2006) No. 08, p. 209-211.

Oxley, J.& Pandher, G, et al. Equity-based incentives and collaboration in the modern multibusiness firm. Strategic Management Journal. Vol.37(2016) No. 7, p. 1379-1394.

Lianwei Li, Zhuo Lu, Yuanyuan Guo, et al. Equity incentive and governance efficiency of Listed Companies—Based on the perspective of human capital. System engineering. (2023), p. 1-15.

Jensen, M. C, Meckling, W. H, et al. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics. Vol. 3(1976) No. 4, p. 305-360.

Tzioumis, K, et al. Why do firms adopt CEO stock options? Evidence from the United States. Journal of Economic Behavior & Organization. Vol. 68(2008) No. 1, p. 100-111.

Jian Wang, Yu Lu, Zhen Zhao, et al. Do equity incentives lead to overinvestment? Empirical evidence from the listed companies in the small and medium-sized board manufacturing industry. New birth. (2013) No. 11, p.13.

Luping Wang, YinZhuan Bai, Yintian Wang, et al. The impact of equity incentive on investment efficiency—Based on the empirical analysis of listed family enterprises. Systems Engineering. Vol. 36(2018) No. 8, p. 37-50.

Li Li, Peifeng Huang, Jing Cui, et al. The impact of equity incentive and its concentration on R & D expenditure—Based on the different perspective of senior executive incentive and core technical personnel incentive in the information technology industry. Research on Technical Economics and Management. (2020) No. 2, p. 18-22.

Xiangyi Xu, Ning Xu, et al. A Study on the dual effect of equity incentive under the Pyramid structure of Xu Ning—The empirical evidence from listed companies in China. Economic Management. (2010) No. 9, p. 59-65.

Yuhui Wu, Shinong Wu, et al. Research on the self-interest behavior of corporate executives and its influencing factors --Based on the evidence of the draft equity incentive of Listed Companies in China. Management World. (2010) No. 5, p. 141-149.

Shoufu Xu, Mingmao Deng, et al. Management equity incentive and stock mispricing of listed companies. Nankai Economic Research. (2020) No. 2, p. 179-202.

Shufang Xiao, Wei Fu, et al. Equity incentive can retain the talent? --Based on the re-announcement perspective. Journal of Beijing Institute of Technology (Social Science Edition). (2016) No. 1, p. 73-81.

Richardson, S, et al. Over-investment of free cash flow. Review of Accounting Studies. Vol. 11(2006) No. 23, p. 159-189.

Feng Chen Ole-Kristian Hope, Qingyuan Li, Xin Wang, et al. financial reporting quality and investment efficiency of private firms in emerging markets. The Accounting Review. Vol. 86(2011) No. 4, p. 1255-1288.

Guanchun Liu, Jun Zhang, Yongwei Ye, et al. The investment governance effect of the bank loan andits ownership structure. Finance and trade and economy. Vol. 43(2022) No. 6, p. 64-79.

Long Jin, Zhiguo Ding, Yuanzhu Ding, et al. Will debt defaults in geo-based networks increase corporate underinvestment?. Journal of entral University of Finance and Economics. (2022) No. 4, p. 50-62+118.