The Reduction Of Major Shareholders Motivates The Launch Of Employee Stock Ownership Plan

The principal-agent problem has always been a difficult problem for the company to achieve sustainable development.Employee stock ownership plan is an important means to motivate employees and is considered to be able to achieve a certain degree of interest synergy between shareholders and employees.In 2014,China formally restarted the employee stock ownership plan.However,over the years,some companies that have implemented the employee stock ownership plan have performed poorly in the capital market,suffered from serious plan losses,and their incentive effectiveness has been questioned.After the launch of the plan,the frequent reduction of large shareholders also implies that there may be non-incentive motivation for the launch of the employee stock ownership plan.Starting from the relationship between the reduction of major shareholders and the introduction of employee stock ownership plan.This paper uses probit model to prove that there is a possibility for major shareholders to implement employee stock ownership plan for the purpose of selling their holdings at a higher price,and this motivation is more significant after the release of the New Regulation on Reduction of Holdings.Besides,this paper analysis the characteristics of employee stock ownership plan,including the source of funds,stock sources and company types.Interestingly,when those characteristics has higher exposure to employee risk,the employee stock ownership plan is more tend to be a tool of reduction.In addition,in order to solve the inherent problem of the possible inversion of cause and effect between the major shareholder’s reduction and the employee stock ownership plan,and to better prove that the major shareholder’s reduction is the reason for the implementation of the employee stock ownership plan.This paper also uses the unlock restricted shares and the scale of it as the instrumental variables of the major shareholder’s reduction,and makes an empirical analysis using ivprobit model.The results show that after eliminating the endogenous noise effect,the major shareholders’ reduction still positively affects the introduction of employee stock ownership plan,and the relationship is more significant.Finally,from the perspective of media attention,this paper uses the number of times the company name appears in the network media headline to measure the abnormal attention of the media to the company.The empirical results show that the large shareholders with reduced motivation may carry out strategic media management to publicize the event that the company promotes the employee stock ownership plan on a large scale.The results of this study pass the robustness test,and explore the possibility of large shareholders using employee stock ownership plan to promote stock prices and reduce their holdings.It proves that the reduction of large shareholders is one of the non-incentive motivations for the implementation of the employee stock ownership plan,and it is helpful for the regulatory authorities to regulate the implementation of the employee stock ownership plan and the reduction behavior of large shareholders.