A Case Study On The Conflict Of Interests Between Executives And Shareholders In Mangbaili Employee Stock Ownership Plan

ESOP as a means to motivate employees in corporate governance,should have the following functions: the act of holding company shares binds employees’ interests combine the entirety interests of the company,maintains the order of interest distribution,and strengthens the incentive effect,thus contributing to the development of the company.Judging from the development process of domestic capital market,the regulatory authority had completely stopped the employee stock plan really in the end for the 20 th century.Then that,the domestic practice related to employee stock ownership plan has been staged for a kind of long time,and relevant progress in updating the regulations has been even slower.Until the issuance of our country’s guidance in 2014 and the relaxation of share buyback conditions in 2018,the ESOP of public companies has once completely more become these hot spots for one in the domestic capital market,with participating companies in various industries.In view of the fact that the implementation of the ESOP of public companies in our country is not enough long at this stage,the conflict of interests of various parties is hidden in the actual implementation process,while the research on optimizing the ESOP is less.Combine agent-entrust theory and info-asymmetry theory,the paper aims to take corporate executives and shareholders as research objects,and sets up a path of interests-conflict between the two parties in the ESOP from their interest demands.Taking Longmang Baili as an example,this whole paper is used to introduced the process of implementing the two-stage ESOP,in order to somehow analyze in kind of detail the performance of the conflicts of interests between senior management and shareholders in the ESOP.After comparing the financial performance of Longmang Baili before and after the implementation of the ESOP and the changes in corporate behavior guided by senior executives,this paper finds out:firstly,after the implementation of the ESOP,the company has not achieved the effect of performance incentives,but some indicators have deteriorated;Secondly,before and after the shareholding plan and during its existence,the senior management has achieved the self-interested purpose of the senior management by manipulating share buybacks,advocating dividend payment,timing information disclosure and controlling voting power,including occupying shareholders’ funds,taking shareholders’ profits,pushing up shareholders’ purchase price and weakening shareholders’ status.All these actions will cause conflicts of interests between the senior management and shareholders.To solve above-mentioned issues,this paper analyzes the causes of these conflicts of interest from three aspects: supervision and construction,corporate governance and investment control.Finally,the author draws inspiration from corresponding cases by connecting the actual situation of the study and the causes of the problems.