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

Rujing Meng; Xiangdong Ning; Xianming Zhou; Hongquan Zhu

doi:10.1016/j.jbankfin.2010.11.004

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 journal › Article › peer-review

44 Citations (Scopus)

Abstract

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 language	English
Pages (from-to)	1541-1551
Number of pages	11
Journal	Journal of Banking and Finance
Volume	35
Issue number	6
DOIs	https://doi.org/10.1016/j.jbankfin.2010.11.004
Publication status	Published - Jun 2011
Externally published	Yes

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abstract = "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.",

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AU - Zhou, Xianming

AU - Zhu, Hongquan

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KW - Firm performance

KW - Incentives

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

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