Analysis of the Impact of Equity Incentives on Corporate Performance and Innovation Capability

As an important part of the incentive mechanism of modern enterprises, equity incentive plays an important role in improving enterprise performance, stimulating employees’ innovation motivation and enhancing enterprise competitiveness. Based on literature research and basic theories, this study selects all A-shares listed on the Shanghai, Shenzhen, and Beijing stock exchanges from 2019 to 2023 as the research object, employing an empirical approach to investigate the influence of equity incentives on both corporate performance and innovation capability. The findings indicate that the implementation of stock-based incentives can notably enhance corporate performance. However, it is also observed that such incentives tend to diminish innovative ability. Furthermore, a significant negative correlation is found between innovation capability and corporate performance.