上市公司股权激励范围的影响因素与经济后果研究

Abstract

Since the implementation of the Administrative Measures for Equity Incentives of Listed Companies in 2006, China's equity incentive policies have gradually improved through continuous practice and exploration, achieving remarkable success over nearly a decade of development. As an important corporate governance tool, equity incentives have played a significant role in helping companies attract and retain key talent, motivate management teams, and enhance overall competitiveness. With the rapid development of China's capital market, the scope of equity incentive applications in companies has expanded steadily, and both the frequency and coverage of implementation have increased year by year, moving from an initial pilot phase into a more mature stage. Today, equity incentive policies are widely promoted across the A-share market, the STAR Market, the ChiNext Market, and among unlisted public companies, with a surge in case numbers reflecting the increasingly prominent role of equity incentives in China's multi-level capital market.
Under the influence of varying market environments and corporate structures, companies have progressively developed equity incentive models suited to their unique needs, continuously exploring diverse incentive schemes and implementation methods to meet the demands of a rapidly changing market. Existing research indicates that equity incentives targeted at executives can reduce agency costs, alleviate information asymmetry, and thereby improve company performance. Likewise, equity incentives for employees enhance their enthusiasm for participating in corporate governance, improve company performance, increase innovation capacity, and help reduce business risks. However, research specifically on the scope of equity incentives remains limited. How do companies determine the target range for equity incentives? What economic consequences result from equity incentives that target only executives, only employees, or both groups? This paper first analyzes the factors influencing the selection of equity incentive scope in listed companies based on agency theory. Then, it examines the economic consequences of different equity incentive scopes using incentive theory and contract theory. Finally, it explores the mechanisms through which the scope of equity incentives impacts company value, drawing from contract theory and executive behavior theory. Using a sample of A-share listed companies from 2007 to 2023, this paper finds the following Findings.
First, pay gaps, ownership concentration, and executives' OVERSEAS backgrounds significantly influence the choice of equity incentive scope in listed companies. Specifically, the greater the pay gap between executives and employees, the more likely a company is to provide incentives to both groups. Companies with a larger external pay gap for executives are more likely to include executives in the equity incentive plan. Companies with more dispersed ownership tend to incentivize employees more often. Additionally, companies with executives who have OVERSEAS backgrounds are more inclined toward equity incentives, with a higher probability of incentives targeted only at executives.
Second, the choice of equity incentive scope significantly impacts a company's future financial performance and firm value. Specifically, when only executives are incentivized, financial performance improves in the following year but negatively affects long-term firm value. Conversely, when only employees or both executives and employees are incentivized, companies experience short-term negative performance but see significant improvements in long-term performance and firm value. This indicates that a more broadly covered incentive mechanism better supports long-term strategic goals and sustained GROWTH.
Third, the scope of equity incentives affects corporate performance and firm value through its impact on Innovation Input and labor productivity. When only employees or both employees and executives are incentivized, companies allocate more funds to R&D, boosting innovation capacity. When both employees and executives are incentivized, labor productivity significantly increases over the next two years. Conversely, when only executives are incentivized, companies experience a significant increase in real earnings management over the following two years. These findings show that different incentive scopes influence innovation investment, production efficiency, and earnings management through different mechanisms, ultimately reflected in financial performance and firm value. Therefore, companies should fully consider the incentive coverage when designing incentive mechanisms, balancing short-term and long-term objectives to achieve optimal corporate GROWTH outcomes.
The paper has some potential contributions.
First, the innovation in research content. This paper analyzes the impact of incentive distribution between executives and employees on company performance and long-term value from the perspective of equity incentive scope. This approach, which is rarely explored in existing literature, specifically addresses the differential impacts on financial performance, firm value, Innovation Input, and labor productivity under varying incentive scopes. By comparing the economic consequences of "incentivizing only executives," "incentivizing only employees," and "incentivizing both groups," this study enriches the perspective of equity incentive research and provides empirical evidence for exploring more effective incentive strategies.
Second, the innovation in theoretical significance. Based on incentive theory and corporate governance theory, this study deepens the application of these theories in corporate performance mechanisms by introducing the dimension of incentive scope. The findings show that the coverage of incentives influences not only the personal performance of executives or employees but also reshapes the company’s resource allocation and long-term development strategy as a whole. This research extends agency theory to comparative studies of different incentive scopes, offering new perspectives and evidence for improving incentive mechanism and corporate governance theories. It also supplements the role of equity incentive scope in corporate governance and long-term development.
Third, the innovation in practical significance. The conclusions of this study have important practical implications for companies designing equity incentive plans. The findings indicate that different incentive scopes lead to different economic outcomes, suggesting that companies should balance short-term performance and long-term development in practical application and weigh the costs and benefits associated with incentive coverage. Companies that prioritize long-term innovation and improved labor productivity may find that broadly covered equity incentives better align with strategic goals, while incentivizing only executives may boost short-term financial performance but at the expense of long-term value. This study provides empirical guidance for corporate governance, helping companies flexibly select optimal incentive coverage based on their strategic needs, organizational structure, and governance environment to optimize the actual effects of equity incentives.

Date of Award	25 Apr 2025
Original language	Chinese (Simplified)
Awarding Institution	China Europe International Business School
Supervisor	Lin Cheng (Supervisor) & 曾庆生 (Supervisor)