Do ESOPs enhance firm performance? Evidence from China's reform experiment

Rujing Meng, Xiangdong Ning, Xianming Zhou*, Hongquan Zhu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

37 Citations (Scopus)


China introduced employee stock ownership plans (ESOPs) in 1992 purely as an employee incentive scheme. The government initiated the policy experiment on ESOPs as part of China's reform of its state-owned enterprises, and it was abruptly terminated 2. years after initiation. This policy experiment resulted in an exogenous sample of ESOPs that allows us to provide the first evidence from Chinese firms on the performance-ESOP relation. After examining a variety of performance measures, including ROA, ROE, Tobin's q, and productivity, we find little difference in performance between ESOP firms and non-ESOP firms.

Original languageEnglish
Pages (from-to)1541-1551
Number of pages11
JournalJournal of Banking and Finance
Issue number6
Publication statusPublished - Jun 2011
Externally publishedYes


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