Empirical Research On The Influence Of ESOP On The Performance Of Listed Companies In China

Employee Stock Ownership Plan(ESOP)originated in western countries,has a hundred years of practice.In China,ESOP has gone through four stages from emergence to development.ESOP reflects the nature of socialist property rights,which is an important measure to improve the basic economic system with public ownership as the main body and multiple ownership economy developing together.According to the incentive theory,listed companies tend to set up a compensation contract mechanism with market vitality in the governance arrangement to alleviate the principal-agent problem.However,based on the inchworm effect theory and the existing literature research,it is found that the inequality of salary distribution between executives and employees in China's listed companies is mainly reflected in the widening compensation stickiness gap between executives and employees.How to solve the unfair problem of salary distribution rules in listed companies is the common focus of academia and practical field.This paper puts forward the following questions about the unfair distribution of compensation and the follow-up development of ESOP in Listed Companies: can ESOP enhance the compensation stickiness of employees,so as to improve the passive position of employees in compensation distribution and alleviate the inequality of internal compensation distribution? From the long-term strategic background of building an innovative country,innovation cannot be separated from talents.The report of the 19 th National Congress of the Communist Party of China points out that China should be built into an innovative country.Innovation needs different individuals to work together.Therefore,how to stimulate the enthusiasm and creativity of different individuals(employees)in the organization,tap the potential of employees,and promote enterprise innovation has become one of the hot spots in the theoretical and practical field of our country.According to the two-factor theory put forward by Louis Kelso,the father of employee stock ownership plan,employee stock ownership plan enables employees to own shares of the company,which is a system design that can realize the perfect combination of labor and capital.In theory,if ESOP can combine labor and capital elements organically,it will certainly increase the position of employees in compensation negotiation and promote employees' compensation stickiness.At the same time,the employee stock ownership plan,by giving certain capital attributes to the labor factors and reasonable design of the equity income realization mechanism,makes the employees pay more attention to the long-term interests of the enterprise,and the improvement of the innovation ability of the enterprise needs to create a failure tolerant environment for the employees,that is,pay more attention to the long-term interests and give up certain short-term interests at the right time.In addition,the ESOP makes employees leap to shareholders,forming a "shareholder employee" interest community.According to the theory of psychological ownership,employees who act as shareholders themselves will change the passive state of compensation and other interest negotiations with senior executives in the past,in order to change the inequality of compensation distribution between them and the management,and at the same time,they will be more widely and actively involved in the company's innovation activities to improve the innovation ability of the company.However,in the specific development background of China,whether ESOP can really play a role,whether it can improve the compensation stickiness of employees,improve the innovation level of enterprises,and ultimately improve the performance of enterprises is an important issue to be demonstrated.Based on this,this paper uses literature research,quantitative analysis and other methods,from the perspective of compensation stickiness and enterprise innovation,focusing on how ESOP can improve employee compensation stickiness to retain core talents,achieve the effect of promoting innovation ability,and ultimately improve the performance of the company.The mechanism and effect of performance impact are analyzed theoretically and empirically.The purpose of this paper is to further enrich the relevant theories of ESOP through the theoretical and empirical research on the promotion mechanism of ESOP on enterprise performance,and to provide effective suggestions for business decision-making and government system reform in China,so as to provide useful theoretical reference and practical guidance for building an innovative country in China.In view of the above problems,this paper uses A-share listed companies in Shanghai and Shenzhen in 2014-2018 as the sample to conduct a more detailed empirical analysis and elaboration,and the main research contents are as follows.First of all,the relationship between ESOP and compensation stickiness is studied.Through in-depth theoretical analysis,this paper combines ESOP with compensation and performance to explore the impact of ESOP on the compensation performance sensitivity and compensation stickiness of employees.Secondly,it explores the relationship between ESOP and corporate innovation.Employee stock ownership plan plays an important role in retaining core talents for the improvement of employee performance compensation stickiness.What effect will the improvement have on the innovation ability of the company? In this paper,the multi period difference-in-difference model is used to verify this.In order to overcome the endogenous problems and estimation bias caused by sample selection,PSM-DID method was used to retest the above results.It needs to be pointed out that this paper also innovatively studies the impact of the level of employee innovation input on the innovation incentive effect of ESOP from the perspective of employee innovation input,and further investigates the heterogeneous relationship between ESOP and company innovation under different employee education level and salary level.Thirdly,we study the impact of ESOP on corporate performance.This paper creatively compares the impact of ESOP and equity incentive on corporate performance,and uses the difference-in-difference and logit model to analyze the impact of ESOP on corporate performance.The results show that:(1)ESOP improves employee's loyalty and bargaining power to the company by establishing "employee shareholder interest community",which has a significant positive effect on employee's compensation performance sensitivity and improves employee's compensation stickiness.In the companies with low growth or small number of employees,ESOP significantly enhances employee compensation stickiness,while in the companies with high growth or large number of employees,the effect is not obvious.(2)ESOP significantly promotes the innovation level of Listed Companies in China,and this innovation incentive effect is more effective in non-state-owned enterprises.The higher the level of employee innovation input,the stronger the incentive effect of ESOP.The higher the level of employee education,the lower the salary level,the stronger the incentive effect of ESOP.(3)the implementation of ESOP has a significantly less positive effect on corporate performance than equity incentive,which may be caused by the welfare orientation of ESOP,or by the imperfection of ESOP in China.At the same time,the reduction motivation of ESOP can be identified from the aspect of lifting the ban on restricted shares.When the stock source of directional transfer is identified,the reduction motivation of ESOP is more obvious.Investors in the capital market can fully identify and react negatively to ESOP with reduction motivation,while enthusiasm for ESOP without reduction motivation is far more than equity incentive.The average benefit intensity of each implementation object,the floating profit and loss of ESOP and the shareholding ratio of ordinary employees can positively affect the future growth of the enterprise.After in-depth theoretical analysis and empirical research,the possible innovations in this paper are as follows: At first,the existing literature research on ESOP is mainly from the perspective of incentive motivation to analyze how ESOP affects the performance of the company by influencing the work attitude and behavior of employees and the level of corporate governance.Based on the inequality of compensation distribution,this paper combines ESOP with compensation and performance to explore the impact of ESOP on compensation performance sensitivity and compensation stickiness,which enriches the relevant research and provides empirical evidence.Secondly,this paper discusses the relationship between ESOP and the innovation of Listed Companies in China,and finds that ESOP significantly promotes the innovation level of Listed Companies in China,and enriches the relevant literature of employee incentive mechanism and company innovation to a certain extent.Different from the previous literature,which simply uses the difference-in-difference model based on the time window to study the pilot plan of step-by-step capacity expansion mode,this paper uses Beck et al.(2010)for reference,and uses the multi-stage difference-in-difference model to test the impact of employee stock ownership plan on corporate innovation.At the same time,in order to overcome the endogenous problems and estimation deviation caused by sample self selection,this paper uses PSM-DID method,the empirical results are more convincing.Last but not least,different from the existing literature,this paper studies the impact of ESOP and equity incentive on corporate performance,compares the economic impact of ESOP from a dynamic perspective,and further improves the research on ESOP and equity incentive,so as to conclude that the implementation of ESOP has significantly less positive effect on corporate performance than equity incentive.Moreover,the current research mainly focuses on the impact of the lifting of restricted shares on the stock market and the securities market,and this paper demonstrates that the lifting of restricted shares has a significant negative correlation with the implementation of ESOP in the same period,but the lifting of restricted shares before the 2-3 period significantly promotes the implementation of ESOP in the current period.To some extent,it improves the research on the relationship between ESOP and the lifting of restricted shares.To sum up,ESOP has a very positive effect on the performance of listed companies.Although there are many irregularities in the implementation process,but the shortcomings are not hidden,we still need to firmly encourage and further standardize the implementation of ESOP in China's securities market.In view of this,this paper puts forward the following suggestions:(1)improve the relevant laws and regulations of ESOP,protect the rights of employees,so as to improve employee compensation stickiness.(2)the participants and incentives of ESOP are inclined to ordinary employees,especially core technical talents.(3)improve the equity structure of diversified ESOP or employee equity trust investors.(4)continue to vigorously promote ESOP in the reform of mixed ownership of state-owned enterprises.(5)further standardize the behavior of reduction of stock holdings by major shareholders.