Research On The Application And Effect Of ESOP In Market Value Management

Since the implementation of the Split share structure reform in 2005,the Chinese capital market has ushered in the era of full circulation of shares.After the reform,the shareholder wealth of listed companies is determined by market value,and market value management gradually comes into public view.Listed companies are encouraged to actively manage market value in the "New Country Nine" issued by The State Council in 2014,and China Securities Regulatory Commission has made many public statements,encouraging listed companies to use legal and compliant means to manage market value,pursue reasonable market premium,and make full use of capital market financing platforms to serve the development of listed companies.According to the existing academic researches,scholars generally believe that value growth is the main factor driving the growth of market value.Then,as an incentive method acting on human capital,can ESOP also affect the market value performance through its impact on value growth? What are the relevant pathways of action? Under different backgrounds,will different details of ESOP have different impacts on market value management of listed companies? Based on the exploration of the above questions,this paper takes a listed company in the cyclical industry-Jerry’s Shares as a case study,in order to find the answers to the above three questions.Through case study,this paper draws conclusions and answers the above three questions: 1.ESOP can affect the value creation ability of listed companies and thus affect the market value performance;2.The ways of ESOP in market value management are as follows: reducing agency costs,promoting per capita output,tying and introducing talents,short-term significant market reaction,and influencing market capitalization trend by influencing value creation ability;3.For the existence value of periodic fluctuation of listed companies,to launch point and loss of employee stock ownership plan,launched in high value of employee stock ownership plan,employees make money effect is not obvious or even losses,such employee stock ownership plan regardless of the value of the listed company growth or value performance will have a negative impact.On the contrary,the employee stock ownership plan launched at the low point of the industry cycle is easy to benefit employees,so such employee stock ownership plan will significantly promote the value creation ability of listed companies and improve the market value performance.Based on this,this paper puts forward the following suggestions: 1.ESOP can be used as a method to actively manage market value.For industries with cyclical fluctuations,ESOP can be actively launched at the low point of market value to improve their value creation ability and obtain higher market premium;2.ESOP can reduce agency costs,promote per capita output,bind talents and bring short-term positive market reaction for the company.Therefore,for listed companies with high agency costs,low per capita output,frequent turnover of core staff and senior executives or continuous decline in market value,ESOP can be considered to alleviate the above phenomena.