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

Rujing Meng, Xiangdong Ning, Xianming Zhou and Hongquan Zhu

Journal of Banking & Finance, 2011, vol. 35, issue 6, 1541-1551

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 2Â 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.

Keywords: Employee; ownership; Incentives; Firm; performance (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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