Empirical research on the market reaction of equity incentives of China's listed companies

This paper tests the market reaction of equity incentives of listed companies in China by the means of event study since 2006, and compares the reaction intensity of different control rights types of listed companies. The results find that a significant positive market reaction after the disclosure. The reaction intensity of state-owned listed companies is greater than that of companies listed in the SME board. This fact shows that the investors in China more focus on the event itself of equity-based incentives of the listed companies, so that they ignore the relationship between company control rights and the effect of equity-based incentive. The theory of investors' limited attention can be used to explain the fact.