A Study on the Correlation Between Equity Incentives and Business Growth

Abstract

With the establishment of the equity incentive mechanism in China, more and more enterprises are beginning to explore incentive systems in depth. Equity incentive systems have attracted widespread attention and discussion because they can both increase enterprise value and reduce agency costs. If a company can find an equity incentive plan suitable for its own daily economic activities, it can gain an absolute advantage in the competitive market among peers. This paper uses a case study method, focusing on Midea and Haier, to conduct a comparative analysis of the equity incentive plans implemented by two different enterprises in the same home appliance industry. It analyzes the impact of different equity incentive mechanisms on corporate development and proposes relevant suggestions to enable equity incentives to play a better role in promoting corporate development.