Abstract:    Improving the innovation level of state-owned enterprises (SOEs) is an important micro foundation for implementing the strategy of innovation-driven development and promoting high quality economic development.  This paper uses a sample of A-share state-controlled listed companies for the period 2006-2021, and empirically examined the impact of equity incentive plan on the innovation activities of SOEs by using the year-by-year propensity score matching method and multi-period difference-in-difference model. The findings demonstrated that the adoption of the equity incentive plan considerably raises SOEs′ R&D expenditures, and that this effect is more notable in SOEs with low stock liquidity, high industry competitiveness, high degree of mixed ownership reform and in the mature stage. The mechanism test showed that the equity incentive plan mainly improves the R&D investment of SOEs by improving the quality of internal control and the level of risk-taking of executives, and overcoming the shortsighted tendency of executives. Further research revealed that the equity incentive plan mainly enhances the exploratory innovation investment rather than the exploitative innovation investment, and also improves the innovation efficiency and innovation output of SOEs, which reflects the innovation strategy of "raising quantity and quality together". This paper has enriched the research on the incentive mechanism of SOEs′ innovation from the perspective of equity incentives, and will provide some theoretical references and empirical evidence for the relevant departments to formulate a series of policy documents to promote the implementation of equity incentive plans in SOEs from the perspective of enterprise innovation.

Key words: equity incentive plan, state-owned enterprise (SOE), innovation input, innovation efficiency, innovation output