Stock Market Reactions To First-time Employee Ownership Plan Adoptions And The Related Influence Factors

In recent years,the Employee Stock Ownership plans(ESOP)is becoming a part of Chinese people's economic life.It was defined as employee benefit plan at the first time,which combined capital factor and labor factor together.In this way,the interest of employee and employer can be gradual converged.Researcher also thinks that ESOP may solve the problem of agent theory.However,ESOP experienced many troubles in China.Thanks to the development of construction of the Chinese characteristic socialist economy,the state council announced an instruction,which called A Plan Pilot Guidance about Listed Companies Implement Employee Stock Ownership.In this instruction,the Securities and Futures Commission list the requirements which ESOP need to follow.Starting from July,it has been two years since this instruction released.And many companies conduct its own ESOP during this time period.In this paper,the author starts with the market reaction towards the announcement of ESOP and analysis the related influence factors.In the end,the paper provides advices from the research results.There are seven sections in this paper.The first part is an introduction,which introduce the background,related information and analyzing method.The second part is journals reviewed.It talks about related research in foreign countries and in China.Third part reaches different theories in this studying field.The fourth section is research hypothesis.By gathering different analyzing methods in the world,the author builds regression model in this paper.The next part is testing.By using event study method and regression model,the author tests each factor,which may influence the result.The sixth and seventh parts of this paper are research result and reasonable advice.Finally,the author talks about limitations in this paper and looking forward for future research.The research results of this paper are as follows: First,the market reaction towards ESOP is positive.It is considered as a good signal to the investors.Second,the degree of market's reaction is depending on which types of employees will benefit from the plan.Third,if the company conducts its ESOP through Non-public offering,it will receive better result.The innovation points of this paper are as follows: First,innovation in perspective.This paper is focusing on short-term influence.It conducts analysis on market reaction after ESOP announcement.Second,innovation in method.By using event study methodand regression model analysis,this paper tests short-term influences,which is not normal is this studying field.Third,innovation in data.All of the data in this paper is from June 30th,2014 to June 30th,2016.