Equity Incentive,Restraint Mechanism,and Corporate Performance: Empirical Evidence from Listed Companies in China

Taking listed companies implementing equity incentive from January 1,2006 to December 31,2010 as the sample,this paper discusses the restraint mechanism including constraints of the equity incentive plan,internal corporate governance and external supervision,and studies the correlation among equity incentive,restraint mechanism,and corporate performance.Conclusions are found as followings:(1) There is a significant positive correlation between the implementation of equity incentive and performance.Equity incentive improves corporate performance.(2) The level of constraints is positively correlated with corporate performance,which means that the more effective restraint mechanisms on management,the more improved corporate performance.(3) The synergistic effect fails to function because the equity incentive and restraint mechanisms are not yet effectively co-ordinated currently.