Study On The Market Reaction By The Employ Stock Ownership Plan Of The Listed Companies

As one of the stock incentive plans,employee stock ownership plan(ESOP)was created in the 1920 s in the US and attracted increasing attention since 1970 s.China introduced regulations related to the ESOP in 1992.However,due to the lack of specific rules for implementation,very few listed companies in China used ESOP.With the publication of “guidance on the implementation of the listed company's employee stock ownership plan” by China Securities Regulatory Commission(CSRC),more and more listed companies accept ESOP.The sample we use in the paper are 180 listed companies which have implemented ESOP,at the same time,we apply T-test model to find the impact of ESOP on the stock price after setting up certain time window.Through our empirical analysis,we have the following conclusions:(1)ESOP leads to excess return at the announcement day and the next two days after the announcement day;(2)excess return has a positive relationship with time within the first 3 months after the announcement day,that is to say,excess return will increase with the passage of time;(3)there is economic significant excess return before the announcement of ESOP,which means the management announce the ESOP for time management to maximize the benefits of employees.Based on the empirical analysis of our paper,we come up with 3 suggestions.Firstly,regulators should encourage listed companies to carry out ESOP and to increase the proportion of ESOP in SOEs(state-owned enterprises).At the same time,listed companies are supposed to enhance disclosure and conduct more effective and feasible ESOPs.What's more,when making investment decisions,investors should pay more attention to companies that have ESOP,which could generate higher excess return in a long time horizon.