Confucianism and employee stock ownership plans: Evidence from Chinese listed firms

Xixiong Xu and Lingling Duan

Economic Analysis and Policy, 2023, vol. 78, issue C, 859-872

Abstract: We investigate whether Confucian culture affects the adoption of employee stock ownership plans (ESOPs). Using data from a sample of Chinese A-share listed firms between 2014 and 2020, we find that Confucianism promotes firms to adopt ESOPs. This effect is concentrated in firms with high human capital intensity, intense industry competition, and less foreign culture influence. Further analysis reveals that stronger Confucian influence leads to longer lock-up periods, more employees holding, larger actual fund size, and more shares per employee for ESOPs. Finally, we suggest that by trigging ESOPs, Confucianism enhances firm value. This study highlights the importance of culture for employee incentives and extends our understanding of ESOP determinants.

Keywords: Confucianism; Employee stock ownership; Informal institution (search for similar items in EconPapers)
JEL-codes: G32 G41 J33 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:859-872

DOI: 10.1016/j.eap.2023.04.035

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