Research On State-owned Enterpirses' ESOP And Economic Consequences

Since the issuance of "Guidelines of Carrying out ESOP in Listed Enterprises" by CSRC in June 2014,the once blocked ESOP have begun resurfaced.It is the time that reform of state-owned companies has come into the "new normal state".As a result,the employee stock ownership plan which is regarded as an essential measure during state-owned companies' mixed ownership reform,deserves more attention.Which makes the paper differs from the existing research is that this paper not only analyses the mechanism between ESOP and the value of a company but also the market reaction of the restricted stock held by ESOP been listed,so as to provide reference for the subsequent implementation of employee stock ownership plan for state-owned enterprises,which is of great practical significance.This paper regards the employee stock ownership plan implemented by Haige communication as the research object,and analyzes the implementation strategy,implementation motivation and economic consequences of employee stock ownership in state-owned enterprises in detail with the case study method.Firstly,in view of the theoretical basis and literature review domestic and international,this paper sorts out the economic effect of employee stock ownership and the design of contract elements.Secondly,based on extensive literature reading,it summarizes the transmission mechanism between employee stock ownership plan and enterprises' value from multiple perspectives.Thirdly,it deeply analyzes how Haige communication carry out ESOP,including the implementation process and contract elements,by the same time,explores its implementation motivation based on the contract elements.Fourthly,the event study method and financial analysis method are adopted to comprehensively analyze the economic consequences of the implementing employee stock ownership plan,including three dimensions that is market,finance and governance.Meanwhile this paper verifies whether it is consistent with the transmission mechanism between the employee stock ownership and enterprises' value that we concluded before.Ultimately,based on the above research,the advantages and disadvantages of the employee stock ownership plan of Haige communication are evaluated,meanwhile giving advises for state-owned companies regarding follow-up implementation of ESOP.Through the case analysis,the major conclusions are drawn as follows:(1)Except for the significant improvement in market performance,employee stock ownership of Haige communication only has a short-term incentive effect on financial performance and governance performance,with little long-term effect.(2)Haige communication adopts private offering to subscribe shares,issuing subject includes senior executives and employees as well as the controlling shareholder,which avoid the risk of dilution of state-owned assets.(3)The incentive effect fails to achieve the desired effect because of the unreasonable design of various contract elements in the ESOP scheme,such as insufficient information transparency,low employee coverage rate and single source of funds.(4)In order to achieve the long-term incentive effect of employee stock ownership plans,enterprises should learn from the successful cases of other companies' employee stock ownership plans and combine with their own conditions to set reasonable conditions for unlocking,sources of subscription funds,routines to exercise rights and participants.