Abstract: Whether the market-based selection and incentive of executives can improve business performance is a question to be answered in the reform of state-owned enterprises. This paper explores the different effects of equity incentive on cash holding behavior of market-based selection “administrative executives”and “market-oriented executives” in SOEs. Results show that equity incentive has a significantly positive effect on listed state- owned enterprise executives, the higher the intensity of equity incentive, the more cash holding level of executives will be towards the level of target cash holdings; equity incentive for “market-oriented executives” does not get better results compared with equity incentive for “administrative executives”. Further research shows that the “Eight Rules” of the CPC Central Committee and high financing constraints lead to the relatively weak incentive effect of “market-oriented executives”;in the enterprises with less investment opportunities, “market-oriented executives” with equity incentive perform better than “administrative executives”.

Key words: mixed ownership;administrative executives, market-oriented executives;equity incentives;cash holdings