Employee Stock Ownership's Proportion?Coverage And The Corporate's Profitability

ESOP's proportion refers to the percentage that the shares granted to employees to the company's total number of shares,ESOP's coverage refers to the percentage that the number of employees participating ESOPs to the total employee number of the company,they both are important part of employee stock ownership plans?This paper reviewed up-to-date researches relating to employee stock ownership,summarized some typical theories such as Equity Theory?Maslow's Hierarchy of Needs?Two Factor Theory?Expectancy Theory and Principal-agent Theory,and then analyzed ESOP's impact on corporate's profitability?We construct a sample which is consisted of companies implementing ESOP plans between January 1st 2006 and December 31st 2014?Using ROE as a proxy for company's profitability,we analyzed the impact of ESOP's proportion and coverage on company's profitability?After careful empirical study,we conclude that:(1)The proportion of employee stock ownership is positively related to company's profitability,but the proportion should be within a reasonable scope,we didn't find significant improvement in company's profitability outside the scope?(2)Managerial stock ownership has a greater impact on listed performance's profitability than ordinary employees?(3)The coverage of ESOP plans is also positively related to company's profitability,most ESOP plans'coverage are within reasonable range,ESOP plans are not invalidated by a“too large”coverage?Based on these theoretical and empirical analyses,we put up with following four suggestions as a reference:Firstly we suggest listed companies implement ESOP plans to enhance it's profitability,but they should set a reasonable employee stock ownership proportion?Secondly we suggest companies should be unprejudiced while implementing ESOP plans,taking both efficiency and justice into account?Thirdly we suggest companies realize the important role that ESOP's coverage play in motivating employees?Fourthly we suggest policy makers enhance its supervision on the daily operations on ESOP plans to protect the interest of employees from being damaged?...