Modern Business: Equity Incentive Financial Treatment in Research and Development Incentives of Biotech Enterprises

Ping Li
Northeast Agricultural University, College of Economics and Management, Harbin 150030, China.
Huiying Wang
Northeast Agricultural University, College of Economics and Management, Harbin 150030, China.

Abstract:

This paper takes biotech enterprises in the context of modern business as the research object, focuses on the design defects and implementation failures of the equity incentive system, constructs an optimization model guided by incentive effect performance and supported by a supervision and accountability mechanism, and proposes an improvement path covering the diversification of incentive structures, transparency of financial disclosure, and embedded supervision of governance mechanisms. Data shows that between 2017 and 2021, the net profit growth rate of the experimental group has always been better than the industry average, steadily increasing from 19.3% in 2017 to 22.9% in 2021. In contrast, the performance of the control group was poor, with a net profit growth rate of -7.5% in 2019 and still negative growth in 2022 (-1.3%), both significantly lower than the industry average. In terms of financial risk control, the experimental group also achieved remarkable results. The current ratio increased from 2.45% in 2017 to 3.25% in 2022, and the quick ratio also increased from 1.89% to 2.50%. Studies have shown that the optimized equity incentive and supervision mechanism not only effectively promotes the sustained growth of corporate net profit and revenue, but also significantly inhibits earnings management behavior, providing a strong guarantee for the sustainable development of enterprises.