Employee stock ownership plans and firm productivity in China

Haitong Li, Ziang Lin and Bo Huang

The Economic and Labour Relations Review, 2022, vol. 33, issue 4, 829-849

Abstract: A growing number of Chinese firms motivate their employees through employee stock ownership plans (ESOPs). Using a sample of listed firms in China, this paper examines the impact of ESOPs on firms’ total factor productivity (TFP), as well as the mechanisms of ESOPs. The empirical results show that ESOPs have a positive impact on firm TFP. The mechanism tests convey that ESOPs increase firm TFP by promoting research and development (R&D) investment and mitigating agency costs. These results are robust after accounting for endogeneity and using alternative metrics of TFP. In addition, we find that the positive effect of ESOPs on firm TFP is more pronounced in non-state-owned firms and firms with a less severe free-riding problem. Furthermore, the effect on firm TFP is positively associated with the subscription proportion of non-executive employees in ESOPs. Overall, the results of this study underscore the important role of employee ownership in firms’ productivity improvement. JEL Codes : D24, G30, J33

Keywords: Employee stock ownership plan; firm productivity; ownership structure; China; labour policy (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/10353046221119553 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ecolab:v:33:y:2022:i:4:p:829-849

DOI: 10.1177/10353046221119553

Access Statistics for this article

More articles in The Economic and Labour Relations Review
Bibliographic data for series maintained by SAGE Publications ().