TITLE:
Impact of Core Employee Equity Incentive on Enterprise Performance
AUTHORS:
Yunxi Jiao, Yuan Wang, Jacob Azaare
KEYWORDS:
Core Employee Equity Incentive, Enterprise Performance, Agency Cost Problem, Incentive Intensity
JOURNAL NAME:
Technology and Investment,
Vol.13 No.4,
September
29,
2022
ABSTRACT: Considering China’s
A-share listed enterprises that completed equity incentive from 2010 to 2017 as
the research sample, this paper empirically analyses the impact of core
employee equity incentive on enterprise performance. Controlling key enterprises’
variables such as size, type, financial leverage, book to market ratio in a
time series regression, return on equity and earnings per share are explained
by incentive of core employees and importance of core employees’ ratio. The
results suggest that, increasing the intensity of equity incentive of core
employees has an incentive effect on corporate performance and also, the higher
the enterprise attaches importance to employees in equity incentive, the more
obvious the incentive effect on performance. The empirical results of this
paper have important implications for the design of equity incentive schemes
for listed companies, which will serve as a guide for investors’ decisions. Therefore,
in order to solve the agency cost problem, the shareholders of listed
enterprises should increase the incentive intensity and importance of the core
employees who are the cornerstone of the enterprise, in the design of the
equity incentive scheme.