Research On Implementation Strategies And Consequences Of Leveraged Employee Stock Ownership Plans In Listed Companies

In June 2014,the China Securities Regulatory Commission and other institutions jointly issued the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions",marking the restart of the employee stock ownership plan of listed companies in my country.Since then,with the steady progress of the employee stock ownership plan,a leveraged employee stock ownership plan model with Chinese characteristics has been gradually developed and adopted by many listed companies.However,the leveraged employee stock ownership plans implemented by many companies have shown floating losses,even falling below the cost of employees.Therefore,more attention should be paid to the risks of leveraged employee stock ownership plans.The case method of this article,taking Sophia as an example,refines the research perspective of the employee stock ownership plan,focusing on the leveraged employee stock ownership plan.It mainly studies the motivations of listed companies implementing leveraged employee stock ownership plans,the specific plans adopted,and the effects of implementation.This article first briefly introduces the institutional background of the implementation of Sophia’s leveraged employee stock ownership plan,and analyzes the implementation strategy of Sophia’s leveraged employee stock ownership plan based on relevant theoretical foundations and summarized documents.Then,it analyzes the motivation and mechanism of implementation,analyzes the motivation for the implementation of the leveraged employee stock ownership plan from the perspectives of internal and external factors,and introduces the value effect and risk effect it brings.Finally,it evaluates the economic effects of leveraging employee stock ownership plans from two aspects of market performance and financial performance.After analyzing the case,this article finds that adding capital leverage to the employee stock ownership plan will not only bring positive value effects,but also risk effects.At the same time,through the introduction of the case company Xilinmen,it is finally concluded that the positive effect of the leveraged employee stock ownership plan is greater than the effect of the non-leveraged employee stock ownership plan.Through a comprehensive study of leveraged employee stock ownership plans,this article uses a newer method:horizontal comparison-leveraged and unlevered effect analysis and vertical comparison-the impact of changes in the leverage ratio of the case company.The theoretical research content of employee stock ownership plans is hoped to provide a reference for listed companies to rationally implement leveraged employee stock ownership plans and promote the healthy development of leveraged employee stock ownership plans in China.