Empirical Research On Listed Company's Employee Stock Ownership Plans And Corporate Performance

The Third Plenary Session of the Eighteenth Central Committee made it clear that “allowing the mixed ownership economy to implement the employee stock ownership and forming the interests community of capital owners and labors”,with that listed companies show series of positive response.However there are great difference between this plan with 1980s' s both on objective and implementation.This paper uses Propensity Score Matching to get paired samples which called control group for 196 listed companies called treat group which announced and implemented ESOP between 2012-2016,then using Difference-In-Difference model to analyze that corporate performance has been improved with the implementation of this policy.Either in stated owned company or non-stated owned company,a great increase on performance exist,especially former's net effect is as much as latter's 2.4 times.Same situation states in high-tech group and non-high-tech group,former's net effect is as much as latter's twice.The effect of ESOP is not only for rebuilding confidence on capital market but also for increase on performance.Furthermore,this paper explores three key factors for influencing the improvement,including employee shareholding ratio,ESOP and free ride,stock source and fund source of ESOP.The study finds that the higher proportion the greater improvement on performance companies can get.When the total number of employees is less or moderate,ESOP for enhancing the performance is very meaningful,about 1.1 percentage point increase,the maximum increase is around 2.1 percentage points,but with the increase in the total number of employees,ESOP's net effect is restrained or weakened by free ride problem.In order to solve this problem,this paper uses large employees group as whole sample to analyze that high shareholding ratio can alleviate free rider problem significantly.Finally,this study finds that when the non-secondary market and non-staff salaries and their own funds combined,the improvement of corporate performance is far less effective than other combinations.This article as a meaningful reference to provide advice about ESOP design for listed company that ready to declare and implement a plan.