Case Study On Implementation Effect Of Employee Stock Ownership Plan Of Yiwu Huading Nylon Company Limited

Employee Stock Ownership Plan is one of the effective ways for companies to encourage employees to hold the company's stocks.The implementation of Employee Stock Ownership Plan not only helps to establish and improve the benefit-sharing mechanism between employees and owners,but also effectively improves corporate governance level,employee cohesion and enterprise competitiveness.In order to standardize and guide listed companies to implement Employee Stock Ownership Plan and related activities,the “Guiding Opinions on the Implementation of Pilot Programs for Listed Companies to Implement Employee Stock Ownership Plan” was issued by the CSRC in June,2014.Since then,both the theoretical research and practical promotion of Employee Stock Ownership Plan have entered a stage of rapid development in China.The implementation of Employee Stock Ownership Plan is no longer limited to state-owned enterprises undergoing mixed ownership reform.It has also begun in private enterprises.There is also practice in the nylon filament industry.With the support of national macro policy and internal demand of the company,Yiwu Huading Nylon Company Limited implemented Employee Stock Ownership Plan in April,2016.As an influential leader in the industry,Huading also takes the lead in completing the implementation of Employee Stock Ownership Plan,which has important research significance because of its typicality and representativeness in the industry.At first,this paper sorts out the relevant theoretical literature of Employee Stock Ownership Plan,obtains the theoretical basis of this paper research,and conducts a literature review.Secondly,this paper gives a detailed introduction to Yiwu Huading Nylon Company Limited and its Employee Stock Ownership Plan.Thirdly,this paper carries out a detailed analysis of the implementation effect of Employee Stock Ownership Plan of Huading through multiple dimensions,such as market effect,financial performance and non-financial performance.Specifically,using event research method,through stock price movement analysis and cumulative abnormal rate of return analysis,this paper comprehensively evaluates the market effect of Employee Stock Ownership Plan of Huading.Then this paper uses ratio analysis method,comparative analysis method,from the four aspects of debt repayment ability,profitability,operating ability and development ability,longitudinally compares and analyzes Huading financial performance changes after the implementation of Employee Stock Ownership Plan.Next,another representative company in the industry is included in the analysis,and a horizontal comparison is made to further consider the impact of the Employee Stock Ownership Plan on the financial performance.In addition,this paper focuses on the employees composition changes and evaluates the non-financial performance of Huading Employee Stock Ownership Plan.This paper obtains the following main conclusions.In terms of market effect,the Employee Stock Ownership Plan has a short-term positive incentive effect.In terms of financial performance,the positive role of the Employee Stock Ownership Plan is more significant in the three aspects of debt repayment,profitability and growth ability.But it is not effective enough in improving operating capability.In terms of non-financial performance,Employee Stock Ownership Plan has positive incentives,too.But the positive effects are not immediately.This paper mainly studies the effect of the implementation of Huading Employee Stock Ownership Plan,and aims to analyze the existing problems and explain the reasons to provide experience and reference for the promotion and implementation of the Employee Stock Ownership Plan in the future.The author believes that there are still inadequacies such as narrow participation scope,low shareholding ratios,short holding periods,and lack of employee rights protection.In view of the current problems,this paper proposes the following enlightenments.Appropriately expand the scope of employee shareholding participation,clearly define the criteria for participation,and recruit excellent talents.Fully integrate the performance appraisal system,rationally set employee shareholding ratio,and achieve dynamic employee shareholding.Extend the employee's shareholding period,postpone the liquidation of the Employee Stock Ownership,and achieve long-term incentives.Establish a full-time department to exercise rights,coordinate and protect employees' rights and interests,and preserve employees' voice.