A Study On The Impact Of Equity Incentives On The Performance Of Pharmaceutical Companies

With the continuous development of China’s economy,the capital market has been increasing its requirements for enterprises.At present,most of the enterprises in China are in a state of "separation of ownership and management" in their daily operation,and most of the operators only care about the immediate interests and have different goals from the owners,which may lead to restrictions on the development of the enterprises.Based on this background and the many successful cases abroad,China has introduced equity incentives as a method that is beneficial to both owners and operators.Not only can equity incentives solve the information mismatch between owners and operators,but they have also been found to have a positive effect on the company during the implementation of equity incentives.The 14th Five-Year Plan puts forward the new trend of "health-based",providing strong support for the biomedical industry,which is related to people’s health.Focusing on pharmaceuticals,vaccines,advanced diagnostic and treatment technologies and equipment,and biomedical materials,we will improve our original innovation capabilities and strengthen the supply chain of high-end biomedical products and equipment.Along with the continuous development of the national economy,people’s living standards have reached a new height and have begun to pay more attention to a high quality of life.People are more and more concerned about their bodies and have higher and higher requirements for hygiene,which requires pharmaceutical companies to have higher pharmaceutical technology and research and development capabilities so that they can meet the needs of their customers.Therefore,research into pharmaceutical companies is of great importance.Against this background,this paper selects a typical pharmaceutical company,Betta Pharmaceuticals,as the subject of this study and conducts an in-depth analysis of the impact of its equity incentives on corporate performance.The paper firstly clarifies the background and significance of the study,compares the literature on the relationship between equity incentives and corporate performance,and introduces relevant concepts and theories.Secondly,it starts from the industry situation and analyses the current situation of pharmaceutical companies and the current situation of equity incentives,which builds a bridge for the case study later on.In the subsequent case study,Betta Pharmaceuticals is selected as the case company to provide an overview of Betta Pharmaceuticals’ equity incentive from the perspective of the company’s equity incentive background and motivation,equity incentive scheme and equity incentive elements.The event study method is then used to make an analysis of the short-term market response of Betta Pharmaceuticals;the period 2016-2021 is chosen to conduct an in-depth study of how equity incentives of Betta Pharmaceuticals affect the financial and non-financial performance of the company,using a combination of quantitative and qualitative approaches.It concludes that,firstly,it is important to choose the elements related to equity incentives wisely.Secondly,equity incentives bring positive responses to the shortterm market of the company.Third,equity incentives promote financial performance.Fourth,equity incentives improve non-financial performance.