Managerial equity incentives withdrawal and corporate value of listed companies in China: Analyses based on institutional change perspective

摘要

Based on agency theory and corporate governance theory, we analyze the relationship between the withdrawal of managerial equity incentives and corporate value from the perspective of institutional change. Using the data of equity incentives execution and withdrawal declared from 2006 to 2012 in China listed firms, we test our hypotheses by investigating the synergy effect on corporate value, governance quality and incentives withdrawal. The study indicates: Firstly, we find corporate value and governance quality have a significant impact on the withdrawal of managerial equity incentives, which discloses the selective bias; Secondly, the institutional change of equity incentives facilitate better firms with low profitability or high value to accomplish their incentives program; Additionally, we do not find the obvious market response to the declaration of equity incentives withdrawal in contrast to the significant market response to the declaration of equity incentives execution. Event study meanwhile also shows the weaker market response to the declaration of equity incentives execution for withdrawn firms compared to the response of those firms incentives executed smoothly.