Research On Employee Stock Ownership Plan And Corporate Risk Taking

The implementation of employee stock ownership plans(ESOP)has been repeatedly halted due to imperfect implementation,indicating the complexity of ESOP reform.With the development of China’s market economy and the promotion of mixed-ownership reform,in 2014,the China Securities Regulatory Commission(CSRC)issued the "Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans for Listed Companies",with the guiding principle of increasing direct financing,improving corporate governance,and enhancing enterprise innovation and competitiveness.In 2020,the State Council issued the "Guidelines on Equity Incentives for Listed Companies Controlled by Central Enterprises" to motivate key personnel in business management and core scientific research and technology personnel and promote high-quality development of enterprises.In 2021,the National Development and Reform Commission and the Ministry of Science and Technology issued the "Notice on Deepening the Work of Comprehensive Innovation Reform",making technological innovation the "top priority task".Technological innovation,improving enterprise innovation competitiveness,and high-quality development all require an increase in corporate risk-taking level.Using comparative analysis,propensity score matching(PSM)method,and instrumental variable method on a sample of non-financial listed companies in China’s A-shares from 2006 to 2021,this article theoretically analyzes and empirically tests the relationship between ESOP and corporate risk-taking level,driving mechanism,moderating effect,and economic consequences,and draws the following conclusions:Firstly,the implementation of ESOP promotes corporate risk-taking level.In terms of institutional design heterogeneity,ESOP with leverage,high discount,long lock-in and survival period,high proportion of issued shares,large capital size,and involving more participants have a stronger promoting effect on corporate risk-taking level.Moreover,ESOP managed by third-party institutions have a better effect than those managed by executives,and ESOP with high employee subscription rate have a better effect than those with high management subscription rate.Secondly,the driving mechanism of ESOP in promoting corporate risk-taking level lies in: ESOP reduces the double-layer agency cost,alleviates financing constraints,and promotes corporate risk-taking level;ESOP optimizes corporate investment behavior,increases R&D investment that improves enterprise value,suppresses non-efficiency investment that harms enterprise value and accompanies excessive debt,and enhances the quality of risk-taking level.Thirdly,the promotion effect of ESOP on corporate risk-taking level is affected by internal equity structure and external macro-environment factors.An increase in controlling shareholder’s control rights inhibits the promoting effect of ESOP on corporate risk-taking level,while the monitoring improvement of multiple major shareholders promotes the promoting effect of ESOP on corporate risk-taking level.Economic policy uncertainty has a negative impact on the promotion of corporate risk-taking level by ESOP,while the development of marketization strengthens the promoting effect of ESOP on corporate risk-taking level.Lastly,ESOP promotes enterprise value growth and plays an intermediary role in risk taking level.That is,the supervisory and incentive effect of ESOP on corporate risk-taking level promotes the growth of corporate value.In terms of macro policy recommendations,the government should actively promote and deepen the reform of employee stock ownership plans,improve the external investment environment for enterprises,leverage the long-term mechanism of economic policy,enhance information transparency before and after policy formulation,and guide microeconomic entities to make positive market expectations.Market-oriented reform should be deepened,and the coordinating and autonomous abilities of market mechanisms should be leveraged to optimize the efficiency of resource allocation.In terms of micro enterprise recommendations,enterprises should reasonably formulate implementation rules for employee stock ownership plans,improve the proposal,voting and supervision mechanisms of employee stock ownership plans,ensure the substantive participation of employees in corporate governance,and optimize investment decisions.Multiple major shareholders should be actively introduced to optimize the equity structure and supervise and balance the controlling shareholder,thereby strengthening the supervisory and incentive effects of employee stock ownership plans.