Empirical Research on Equity Incentives for Executives of Different Industries and Dividend Policy
This article selected panel data of Chinese listed companies from 2009 to 2013, and carried out empirical research on interaction between equity incentives for executives of Chinese listed companies in different industries and their cash dividend policy.
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Empirical Research on Equity Incentives for Executives of Different Industries and Dividend Policy Chaojin Xiang, Qianyao Li and Xiaoyi Qu
Abstract This article selected panel data of Chinese listed companies from 2009 to 2013, and carried out empirical research on interaction between equity incentives for executives of Chinese listed companies in different industries and their cash dividend policy. We reached the following conclusions: the correlation between equity incentives and cash dividend policy is prevalent in all companies, but whether it is positive or negative varies in different industries; the tendency and degree of equity incentives of each industry have the same impact on dividend payout ratio. Through further research we also concluded that the impact from equity incentives on cash dividends will be weakened if the management is over empowered; for Chinese listed companies, the dividend policy is significantly affected by equity incentives when the management has little power, and the direction of effect varies in different industries. The conclusions of this paper provide experience and evidence for improvement of incentives and dividend policies in Chinese listed companies. Keywords Equity incentives · Cash dividend · Power of management
107.1 Introduction The equity incentive policy of China came out quite late compared with that of western countries. It was by the end of 2005 when China Securities Regulatory Commission issued Administration for Equity Incentives of Listed Companies that the equity incentive policy had been put into effect. At the very beginning, there were few companies that implemented this policy without canceling it afterwards. But after 2008 Financial Crisis, the number of listed companies that implemented equity incentive policy has increased steadily year by year as a result of the further enhancement of relevant regulation. The main targets of equity incentive are the senior management and the core technical staff, and the main ways of incentive C. Xiang (B) · Q. Li · X. Qu Business School, Sichuan University, Chengdu 610064, People’s Republic of China e-mail: [email protected] © Springer Science+Business Media Singapore 2017 J. Xu et al. (eds.), Proceedings of the Tenth International Conference on Management Science and Engineering Management, Advances in Intelligent Systems and Computing 502, DOI 10.1007/978-981-10-1837-4_107
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include Stock Option, Restricted Stock and Stock Appreciation Right. The purpose is to align the targets’ interest with corporate benefits, and to mitigate the agency problem between the management and shareholders. Dividend policy is a very important financial decision for companies. Because Chinese capital market is young and immature, the cash dividend policy of listed companies has many problems such as low dividend rate, poor dividend continuity, poor dividend distribution, etc. These problems have been incurring much criticism from investors and the public in that the interests of minority shareholders are unab
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