Research On The Motivation And Economic Consequences Of The Employee Stock Ownership Plan Of Zhifei Biology

The employee stock ownership system,which first originated in the United States as a long-term employee benefit tied to an employee pension plan,was introduced into the country in order to promote corporate development,but its development has had many twists and turns.The system has experienced several fluctuations during the nearly 40 years of its development in China,and only in 2014 did it move into a welldocumented practice phase.However,most of the existing studies are empirical studies conducted for all companies that implemented employee stock ownership over a period of time,and fewer case studies have been conducted for key industries.The biopharmaceutical industry is a national strategic industry with long R&D cycle,high risk and high return after successful R&D.Therefore,high R&D capability and innovation level is the key to maintain the competitiveness in the industry.Based on principal-agent theory,human capital theory,incentive theory and signalling theory,this paper presents a case study of the motivations and economic consequences of the implementation of an employee share ownership scheme by Zhifei Biologicals,a leading company in the biopharmaceutical industry,using comparative analysis.Firstly,the background and significance of the study are used to present the question of the motivation for the implementation of the employee share ownership scheme and what the economic consequences are.Secondly,the motivations for the implementation of the employee share ownership scheme are analysed from outside and inside the company respectively,through an introduction to the implementation of the employee share ownership scheme in the case study company.Finally,the mechanism of the economic consequences of the employee share ownership scheme is analysed in the context of theory,and the effectiveness of its implementation is evaluated in terms of financial performance,non-financial performance and market response.The study found that: firstly,Zhifei Bio implemented an employee share ownership scheme against the backdrop of an employee share ownership system and industry policy support,motivated by the need to attract talent,improve the incentive system and increase market confidence;second,the design of the program elements of the employee stock ownership plan can alleviate the principal-agent problem and motivate human capital,which has a certain promotion effect on the company’s performance;third,the employee stock ownership plan transmits different signals to the market through the design of the program elements,which has a certain effect on the company’s performance.Fourth,the employee stock ownership plan has improved the financial performance of the company to a certain extent,while in terms of non-financial performance,the employee stock ownership plan has contributed to improving R&D,corporate governance and human capital efficiency;fifth,the short-term market reaction of the first and third employee stock ownership plans is more positive.Fifth,the shortterm market response to the first and third employee stock ownership plans was more positive.Overall,the implementation of this employee stock ownership plan has contributed to the development of the company.The innovation of this thesis is to construct a framework for analyzing the mechanism of economic consequences and to discuss how the employee stock ownership plan has an impact on corporate performance and the stock market in conjunction with the theoretical basis,thus strengthening the link between the design of the employee stock ownership plan and the implementation effect.The analysis is followed by recommendations from the perspectives of regulators,investors and listed companies,respectively.First,for regulators,employee stock ownership plan,as an important incentive plan,should continue to develop in the relevant legislation to promote support for effective employee stock ownership plan,but at the same time,supervision should be strengthened to prevent negative behaviors that are implemented in deviation from the incentive purpose.Secondly,for investors,the effect of the implementation of employee stock ownership in enterprises is directly related to the interests of investors,therefore,they should have an in-depth understanding of whether the enterprise is investable before investing,grasp the right time when investing,and continuously pay attention to the development of the enterprise after investing.Third,for enterprises,in addition to designing a reasonable employee stock ownership plan,they should also set reasonable expiration dates,set grant conditions and strengthen information disclosure before implementing the employee stock ownership plan in order to obtain better implementation results.