Abstract: A corporate financial decision-making is the result of the power game between the controlling shareholders and the executives as the insiders. Therefore, it is necessary to investigate whether equity incentive can restrain the self-interested behaviors of overinvestment by executives and major shareholders in order to realize their control power and personal gains. By adopting the difference analysis and OLS regression, this study finds out that to carry out equity incentive in the state-owned holding listed companies can restrain the excessive investment behaviors of large shareholders and executives, the higher the equity incentive level, the greater the inhibition will be; while the option incentives would undermine the suppression effect. However, in the non-state-owned holding listed companies to carry out the equity incentive would exacerbate the over-investment behavior of the large shareholders and executives, the higher the level of equity incentive, the higher the level of corporate over-investment will be; when the option incentive is adopted, this kind of intensifying role is more significant.

Key words: property nature; power game between major shareholders and executives; overinvestment; stock incentive; option incentive