The Influence of Executive Equity Incentive on Company Cash Holding

Cash holding of the company has important influence on the decision. In addition, the operating efficiency of enterprises will also be affected by the level of cash holdings. The level of cash holding is too low, enterprises will be difficult to grasp the good external investment opportunities, but also make the financing constraints occur in time to raise enough funds; Based on agency theory, this paper expounds the mechanism of the influence of the senior executive equity incentive plan and its contract characteristics on the cash-holding level. Empirical results show that: Equity incentive plan can reduce the company's cash holdings, the low investment opportunities of the company's cash reduction role more prominent. This paper reveals the effect on the cash holding in different situations, and combs the characteristics of the equity incentive contract, which provides a reference for the design of the company's cash management and executive equity incentive contract.