Research On The Implementation Of Employee Stock Ownership Plan And The Share Reduction Of Large Shareholders In Listed Companies

Affected by the stock market disaster in June 2015,China Securities Regulatory Commission?CSRC?issued a new regulation on reduction of shareholdings on 27^th,May,2017,which restrained the malicious reduction of shareholders through non-public share issuance,bulk trading,and the resignation of directors.It also guided shareholders and executives of listed companies to reduce their shareholdings in accordance with the regulations and improved transparency of disclosure of reduction of shareholdings.At the same time,the employee stock ownership plan?ESOP?,which has been shelved for many years,was launched again.In June2014,the CSRC issued the Guidelines on the Implementation of ESOP Pilot of Listed Companies.However,some listed companies implement ESOP with the motivation of reducing shareholdings,and take ESOP as the main shareholder's counterpart,which makes the implementation of ESOP not achieve the effect of incentives,and is also not conducive to the long-term stable development of enterprises.This paper chooses Goertek Listed Company?Goertek?as the object of case analysis.Goertek,one of the leading enterprises in the acoustics industry in China,carried out strategic transformation in 2015,and implemented three ESOPs from 2015 to 2018 to help the strategic transformation and promote the long-term stable development of enterprises.Firstly,this paper analyses the text of three ESOPs'drafts,the timing of implementation and the time of stock purchase,finding that there is motive for major shareholders to reduce their shareholdings in the process of implementation of the Goertek's"Home No.1"ESOP and"Home No.3"ESOP.Then,this paper makes a concrete analysis of the reasons for the motivation of major shareholder to reduce shareholdings and the reasons for choosing the way of ESOP to reduce shareholdings.It finds that Goertek are facing the double pressure of development bottleneck and intense competition from Luxshare.And at the same time,there is a shortage of funds of the major shareholder.Therefore,major shareholders reduce shareholdings to avoid risks and obtain funds.Because of the concealment and convenience of ESOP,to some extent,compared with the traditional way of share reduction,major shareholder chooses ESOP to reduce.Last,this paper analyses the results of the reduction of major shareholders and the effect of the implementation of the ESOP.It finds that major shareholders gain about 2.7 billion RMB by the reduction of shareholdings between 2015 and 2018.At the same time,the stock price of the company keeps falling.And the ESOP does not play an incentive effect,nor improve the innovation ability and profitability of the enterprise,and finally may have a negative impact on the image of the enterprise.At the end,this paper draws the following conclusions:Firstly,shareholders as insiders have information advantages,in the face of foreseeable risk,they are more likely to choose to reduce their stock holdings to avoid risks.Secondly,the ESOP,which was launched again,has become a new channel for shareholders of some listed companies to reduce their shareholdings.Thirdly,if the motivation of reduction is implied in the implementation of ESOP,it will have a negative impact on the incentive effect of ESOP implementation,which is not conducive to the long-term stable development of the company in general.And the last one,through employee stock ownership plan,Goertek reduce shares and cash out,which,to a certain extent,has a negative impact on the company's stock price,damages the company's image,and may also damage the interests of some small and medium shareholders.