The Microeconomic Effects of Employee Stock Ownership Plans:New Evidence from Chinese Listed Companies
Following the decision of the Third Plenary Session of the Eighteenth Central Committee to use employee stock ownership to promote mixed ownership economic reform,in June 2014,the China Securities Regulatory Commission issued the"Guiding Opinions on the Pilot Implementation of Employee Stock Ownership Plans by Listed Companies",which marked China Employee stock ownership has once again entered everyone's research horizon.Generally speaking,employee stock ownership can motivate employees to work hard,and improve corporate performance by boosting employee morale.However,the employee stock ownership plan has a large number of floating losses in the actual operation process,which makes it difficult to realize the original intention of using employee stock ownership as a means to motivate employees and enhance corporate value.According to market analysis,one of the possible reasons behind this is that the employee stock ownership plan is implemented in order to satisfy the self-interested motives of major shareholders,not solely to motivate employees.In the past,most domestic literature on employee stock ownership plans focused on theoretical explanations and empirical analysis of its advantages.However,many cases of listed firms in reality show that employee stock ownership plans are not as beneficial as they claim.As a result,some studies have begun to give negative evaluations to employee stock ownership plans from the perspectives of invalidation of employee stock ownership plans,unfair distribution and market shocks.However,few documents truly reveal the reasons and channels for the failure of employee stock ownership plans from an empirical perspective.We hope to make a more systematic and comprehensive exploration of economic consequences of the employee stock ownership plan.We investigate the effect of the implementation of employee stock ownership plan by using the relevant data of listed companies in China from 2012 to 2019.This paper finds that the employee stock ownership plans implemented by listed companies in China do not substantially contribute to the development of enterprises,and this conclusion still holds after a series of robustness tests.Further research finds that employee stock ownership plans do not promote the improvement of total factor productivity in companies,but instead become strategic tools for major shareholders to reduce their holdings and companies to invest excessively.It is found that after the implementation of employee stock ownership plans,major shareholders will further reduce their holdings of company shares;Moreover,the reduction of shareholding of major shareholders of the Company is"determined and then acted",rather than"following the trend"after the implementation of the employee stock ownership plan.We find that the major shareholders of listed companies use employee stock ownership plans to obtain their own private interests.That will encroach on the interests of small and medium shareholders.It means that the employee stock ownership plan is used as a short-term arbitrage tool.However,the improvement of the effectiveness of internal and external governance structures of listed companies has also to some extent curbed the encroachment of interests by major shareholders.The main contributions of this paper are as follows:Firstly,by analyzing the behavior of major shareholders reducing their holdings of stocks,this paper reveals the potential motives for profit encroachment behind employee stock ownership plans,providing an economic explanation for the frequent occurrence of floating losses in employee stock ownership plans.Secondly,this paper delves into the issue of whether major shareholders will encroach on the interests of small and medium-sized shareholders,including employees,after the implementation of employee stock ownership plans,enriching the relevant literature on the second type of principal-agent theory.Finally,this paper expands the theoretical framework of the impact of employee stock ownership plans on company performance by examining mechanisms such as total factor productivity and investment efficiency.Compared with previous literature that suggested that employee stock ownership plans have a significant positive impact on company performance,this article draws a different conclusion based on the analysis framework of interest encroachment,that is,employee stock ownership plans have not effectively improved company performance.All in all,the conclusions of this paper can provide policy basis for the supervision of employee stock ownership plan,and help to improve the relevant regulatory system.
万方数据
