The Impact Of Equity Incentives On Innovation Performance In GEM Companies

The Fourteenth Five-Year Plan clearly states that China will adhere to the central position of innovation in the overall situation of modernization and make science and technology independence and self-reform a strategic pillar of national development.Therefore,the willingness of firms to innovate,which is the subject of the national innovation strategy,is critical to the overall improvement of China’s innovation level.And problems such as agency conflicts and short-sighted management decisions,which are common in modern corporate systems,have to some extent inhibited corporate innovation.Nowadays,more and more companies are trying to use equity as a tool to implement long-term incentive plans for senior management and core employees,so that their interests are linked to the company’s interests,thus curbing their short-sighted behaviour to engage in more innovative activities,while hoping to reduce the mobility of senior managers and core employees through share awards to preserve the company’s human resource strength and improve the efficiency of corporate innovation activities.Therefore,the question of how to positively influence the innovation performance of a company through equity incentives is one that needs to be addressed by the company.This paper uses a literature review,case studies,and comparative analysis to investigate the impact of depreciation on innovation and the mechanism by which the depreciation scheme affects the incentive effect for GEM firms.In this regard,taking different incentive targets as the perspective,this paper studies the mechanism of the impact of equity incentives on innovation performance in stages,and then takes the equity incentive scheme of Dinghan Technology as an example for specific analysis.Firstly,the implementation of Dinghan Technology’s equity incentives is introduced and analysed;secondly,suitable indicators are selected to evaluate the changes in Dinghan Technology’s innovation performance in a targeted manner;finally,the impact of Dinghan Technology’s equity incentives on the innovation performance of the enterprise is analysed in detail by innovation input and innovation transformation stages.This paper concludes that the implementation of equity incentives can alleviate the conflicts in the principal-agent chain of "shareholders-executivesemployees",improve the risk-benefit matching of incentive recipients,motivate them to carry out innovation activities,and thus improve innovation performance;the design of the equity incentive system has a significant impact on the incentive effect.The higher the incentive intensity,the better the company’s innovation performance.The findings of this paper provide some reference for GEM listed companies that have implemented equity incentives to improve their innovation performance.