Research On The Benefits Of Huafu Fashion Company's Leveraged Employee Stock Ownership Plan

In June 2014,the CSRC issued the "Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans for Listed Companies".The implementation of employee stock ownership plans has set off a wave among listed companies in China.Subsequently,it developed a new form of leveraged employee stock ownership plan that includes capital leverage,which has attracted widespread attention from listed companies and academia.However,with the downturn in the capital market,according to the Choice database statistics,78%of the 487 employee stock ownership plans implemented as of 2018 are floating losses.The leveraged employee stock ownership plans implemented by many companies have a floating loss of more than 50%.Even some companies have experienced liquidation of leveraged employee stock ownership plans.The problems and risks of leveraged employee stock ownership plans cannot be ignoredThis article chooses the new perspective of the leveraged employee stock ownership plan,and analyzes why listed companies choose to implement the leveraged employee stock ownership plan,how the leveraged employee stock ownership plan has an impact,and what the effect is after implementation.Firstly,based on the theoretical research of previous literature,principal-agent theory,and two-factor theory,this paper analyzes the positive and negative effects of a leveraged employee stock ownership plan,and discusses its impact on company financial performance,market value,innovation,employee and controlling shareholder's interests ect.Based on this,the research framework of this paper is established.Secondly,selected a typical case enterprise Huafu Fashion,analyzed the motivation of its implementation of the leveraged employee stock ownership plan based on the company's own internal and external environment,and analyzed the impact mechanism of its implemented leveraged employee stock ownership plan from both positive and negative aspects.Based on the impact of the impact mechanism on the financial performance,innovation research and development,market response,shareholding plan income,etc.,the implementation effect was analyzed to verify its impact.After a case study,this article finds that adding leverage to employee stock ownership plans will bring both positive and negative effects.In the current downturn in the capital market environment,the negative impact of high leverage is greater than positive effects,and it will even affect the exertion of positive effects.Listed companies need to have a rational and objective understanding of the leveraged employee stock ownership plan,and the long-term incentive mechanism of the leveraged employee stock ownership plan needs to be further improvedThrough a comprehensive study of the leveraged employee stock ownership plan,this paper improves the theoretical research content of the domestic employee stock ownership plan from a new perspective.At the same time,it objectively analyzes the positive and negative effects brought about by the leveraged employee stock ownership plan,reveals the high risks brought by high leverage,and provides a certain reference for the rational implementation of listed companies' leveraged employee stock ownership plans and improves the healthy development of China's leveraged employee stock ownership plan.