The Impact of Employee Stock Ownership Plan on Corporate Performance

Abstract

As an ownership structure refining strategy, Employees Stock Ownership Plans (ESOPs) have been adopted smoothly with efficient outcomes in Western capitalist countries since it was proposed. In recent years, thanks to the great support from the government, the number of enterprises implementing ESOPs has been consistently increasing in China. However, many questions have come up during the implementation process in China. For example, does the implementation of ESOPs give the corporate performance an essential contribution? Are ESOPs beneficial for the state-owned enterprises, in terms of shares arrangement? Based on the binary economic theory and the principal-agent theory, in this paper, the two questions listed would be analyzed. Through the data analysis of the listed A-share companies from 2007 to 2018, it could be concluded that the implementation of ESOPs positively impacts the corporates’ performance, while there is no noticeable difference between the impacts of the state-owned companies and the non-state-owned ones.