Executive Equity and Pay Incentives and Firm Performance—Based on GEM Listed Companies in China

Abstract

Based on the Agency Theory, this paper takes 366 listed companies on the GEM listed companies of China Between 2015 and 2017 as a sample, and uses the two methods of high-level management team incentives. Equity incentives and pay incentives are dependent variables, and the return on assets (ROA) is the independent variable, measuring corporate profitability. At the same time, considering the time difference between incentives and making appropriate operating decisions, this paper conducts a one-year and two-year lag effect test on executive incentives. The conclusion is that executive equity incentives and pay incentives have a positive impact on corporate performance. Executive equity incentives have a positive correlation with corporate performance in the lag period, while compensation incentives do not have significant correlation.