Research On Liquidation Risk Management Of Employee Stock Ownership Plan

The employee stock ownership plan allows employees to obtain the opportunity to share the company's revenue,and links employees' income with the company's profit and stock price,which helps to improve corporate governance,reduce brain drain and improve innovation efficiency.Since 2014,China's listed companies have actively implemented employee stock ownership plans.Due to the impact of stock price fluctuations,employee stock ownership plans have frequently encountered problems such as covering positions,floating losses and liquidations.Therefore,it is necessary to study the management and control of the liquidation risks of listed companies' employee stock ownership plans,to provide relevant experience for listed companies that implement employee stock ownership plans and reduce the phenomenon of liquidation or floating losses of employee stock ownership plans.This article is based on the perspective of management and control of liquidation risks of employee stock ownership plans,using case analysis method and event research method,taking Sanan Optoelectronics,a leading company in Chinese LED chip industry as an example,combining the margin line and the breakeven point stock price of employee stock ownership plan,to analyse the liquidation risks of employee stock ownership plan during Sanan Optoelectronics' stock price continued to fall in 2016 and 2018,and studies the motivations and effects of management and control of liquidation risks of employee stock ownership plan by Sanan Optoelectronics,its controlling shareholders and senior managers through reserving capital to increase equity,increasing stockholdings and repurchasing.The study finds that: first,the employee stock ownership plan makes listed company,its controlling shareholders and senior managers become an interest community through stock price,which promotes them to manage and control the liquidation risks of employee stock ownership plan.Second,listed company,its controlling shareholders and senior managers managing and controlling liquidation risks of employee stock ownership plan can transmit confidence to market investors,which helps maintain the existence of employee stock ownership plan and avoid floating losses.Third,listed company,its controlling shareholders and senior managers maintaining the existence of employee stock ownership plan can convey confidence to the company's employees,which helps reduce the agency costs between shareholders and employees,reduce brain drain,improve innovation efficiency,and finally have positive impacts on the company's operation and long-term development.This article studies the measures,motivations and effects of management and control of liquidation risks of employee stock ownership plan,which can enrich the research results related to the liquidation risk management of employee stock ownership plan and provide the experience of liquidation risk management of employee stock ownership plans for listed companies.