Executive Reduction and Employee Stock Ownership Plan

Empirical Evidence from Chinese A-share Listed Companies

DOI

10.2991/978-94-6463-052-7_62How to use a DOI?

Keywords

executive reduction; employee stock ownership plan; company value

Abstract

Since 2014, employee stock ownership plans have received extensive attention and support from the capital market, and the number of companies implementing the plan has gradually increased. At the same time, the changes to the company’s value that may be caused by the reduction of executives’ holdings have also become issues that need to be paid attention to. This paper uses a sample of A-share listed companies from 2014 to 2020 to sort out both the short-term and the long-term research contexts, the basic status quo of the reduction of executives’ holdings and the launch of the employee stock ownership plans in the A-share Main Board Market. Then it employed the logit regression model to examine the impact of executives’ shareholding reduction behavior on the employee stock ownership plan, and uses the event analysis method and the OLS regression model to explore the impact of the two activities on the company’s long-term and short-term value. The study concluded with three findings: First, companies whose executives have reduced their holdings have a significantly greater probability of implementing employee stock ownership plans. Second, companies that have implemented employee stock ownership plans have significantly increased their market prices in the short term. Third, long-term value is believed to be neither effected by executive reductions nor employee stock ownership plans. Finally, the idea of improving the performance of the company in the short term is put forward.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Danxun Yan
PY  - 2022
DA  - 2022/12/27
TI  - Executive Reduction and Employee Stock Ownership Plan
BT  - Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022)
PB  - Atlantis Press
SP  - 526
EP  - 537
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-052-7_62
DO  - 10.2991/978-94-6463-052-7_62
ID  - Yan2022
ER  -