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Journal of Banking & Finance Vol. 35 No. 6 2011

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

Rujing Meng1; Xiangdong Ning2; Xianming Zhou1; Hongquan Zhu3

1 University of Hong Kong · 2 Tsinghua University · 3 Southwest Jiaotong University

open access

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 2years 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.

DOI
10.1016/j.jbankfin.2010.11.004
Volume
35
Issue
6
Pages
1541-1551
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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