Economic Consequences of Internal Governance and Equity Incentive Systems: A Case Study of Baosteel Group

This paper takes Baosteel Group as the research object to explore the advantages and economic consequences of the internal governance and equity incentive systems in State-owned enterprises. Against the backdrop of the separation of ownership and management rights in state-owned enterprises and the limited role of external governance institutions, Baosteel was the first to introduce independent outside directors and implement an equity incentive plan. The research finds that the introduction of independent outside directors has enhanced the corporate governance level; the equity incentive plan is legal and reasonable, effectively improving the enterprise's innovation ability, profitability, and corporate value. However, there is a problem that the assessment indicators ignore the external environment. Therefore, this paper suggests that state-owned enterprises adjust their performance assessment indicators according to changes in the industry environment. In the future, more attention can be paid to Baosteel's subsequent equity incentives and comparative analysis with other companies can be carried out.