The Financing Purpose Of Employee Stock Ownership Plan And The Market Performance Of Listed Companies

Employee Stock Ownership Plan(ESOP)is an incentive system.By giving employees the stock of the company,employees can enjoy the rights of shareholders,and employees can be both workers and owners.In this way,the interests of the employees and the enterprise demands are tied together.This will effectively arouse the enthusiasm of the employees,and enhance staff's loyalty.Also this will encourage employees to create greater value for the enterprise,and then promote the sustainable development of enter:prises.On the other hand,after the employee's shareholding reaches a certain proportion,it may change the existing equity structure of the company,then it will help to improve the governance of the company,and help establish and improve the management mechanism and incentive mechanism of the company.Since China Securities Regulatory Commission(CSRC)issued the guidance in 2014,the public companies have shown great enthusiasm and interest in ESOP.What is the most effective way to promote ESOP?What mode of ESOP can bring more benefits to enterprises and employees?This is the topic that deserves academic field and industry to discuss jointly.Through the statistics,this paper finds that in the ESOP announced between July 2014 and April 30,2018,the proportion of ESOP with financing purpose is more than one-fifth.It can be seen that ESOP with financing purpose has become one of the main ways of implementing the plan.So it's worth further study.This article choose the event announced between July 2014 and April 30,2018,and this article use event study method and the market adjustment model to calculation CAR on event window period to verify the short-term market performance of ESOP.By using the method of multiple regression analysis,this paper test the market performance of ESOP with financing purpose,and then test the market performance of ESOP with assets or project investment.In turn,this paper provides some answers to the above questions.Previous researches show that financing behavior is a kind of negative signals,companies under financial strain would choose this model in order to transfer this pressure,thus this will weaken the incentive effect.According to the guidance regulation,the lock-up period of ESOP with financing purpose is much longer,this means employees will face more uncertainty,thus its incentive effect will be affected,resulting in a negative effect.However,based on the unique background of China's mixed reform,this paper studies the positive results of ESOP with financing purpose.In this article,the results of empirical study show that ESOP with financing purpose is associated with projects and assets investment,so it will be effective.And compared with external finance,the internal financing mode will provide enterprises with more initiative,so market may give positive feedback to this mode of ESOP.The empirical results also show that in the state-owned and non-state-owned samples,or in the high-tech and non-high-tech industry samples,the positive results of ESOP with financing purpose still exsit.Thus this paper demonstrates the function of ESOP after the issuance of the guiding,and provides empirical evidence for the study of ESOP in China at present,and also enriches the relevant empirical research content.