Employee Stock Ownership Plan's Effect On Financial Performance And Stock Price Of Listed Companies

The Employee Stock Ownership Plans(ESOPs)originated from the United States in the 1960s.It is a mechanism for employees to share the ownership of the company and participate in the distribution of profits by holding shares or options.First of all,this paper learnt from previous researches on the financial performance and market effect of those listed companies implementing ESOPs.Secondly,through the study of the basic concept and theoretical support of ESOP and its development in China,this paper put forward hypothesis on which the following empirical analysis are based.Thirdly,this paper employs two empirical researches to examine ESOP's financial performance and market effect on A-share listed companies.The observation period is from July 1,2014 to December 31,2017.In terms of performance incentive effect,this paper finds a significant and positive nexus existing between ESOP and the financial performance(measured by EPS and ROA)of listed company.The paper also finds through multiple regression analysis that the executives subscription rate of ESOP is positively correlated with the improvement of the company's financial performance as opposed to the proportion of ordinary employees' subscription.It also discovers that in the sample,the performance improvement of state-owned listed companies is weaker than that of other listed companies.In the light of market announcement effect,this paper holds that the market reacts strongly and actively to ESOP.Sample companies can obtain an average excess return of about 2%on the announcement day of ESOP,and this trend continues within 10 days after the announcement.Finally,based on the above conclusions,this paper proposes corresponding policy recommendations and investment recommendations.