Market Response Of Chinese Listed Companies ESOP Policies

ESOP makes employees to hold stock of the company, bundled the interests of employees with the company together. ESOP has been common used in listed companies of Europe and US. In 2012, China Securities Regulatory Commission launched the ’Listed Companies ESOP Interim Measures(draft)’, and in 2014 formally promulgated the ’Guiding Opinions on the Listed Companies ESOP’.In this paper, take the A-share market 347 ESOP listed companies(launched their ESOP from June 2014 to September 2015) and its stock price as a sample, by use of event study and other methods to research the response of listed companies and the secondary market to ESOP policies.The results show that listed companies had a positive response to ESOP policies,especially those private enterprises of Growth Enterprise Board & Small and Medium Enterprise Board. The purpose of taking ESOP is improving the corporate governance,establishing long-term incentive and restraint mechanisms. The main source of funding to implement ESOP is staff salaries and self-financing, and the source of stock is non-public offering of shares. The majority of listed companies manage the ESOP through third parties.In the secondary market, most listed companies reported behavior ESOP program, resulting in a significant positive impact on its stock price. But when the overall stock market volatility down, the market response to some announced ESOP listed companies is negative. In addition, the secondary market response for ESOP is short duration.Finally, this paper presented some problems of listed companies ESOP and the corresponding suggestions, and future research was discussed.