Analysis of the motivation and impact of the implementation of the employee stock ownership plan

Abstract

Equity incentive can be divided into executive equity incentive (Executive Stock Option) and employee equity incentive (Employee Stock Option). Employees here refer to the intermediate managers, core technical personnel and other employees except for the senior executives of the company. The ESOP is a mechanism by which the employees of the company share the ownership of the company by holding the stock or options of the company. From the perspective of the implementation of the employee stock ownership plan motivation, its main theoretical basis can be divided into three categories, respectively is incentive theory (incentive theory, reduce agent costs, attract, retain quality employees and limited to financing constraints, reduce cash pressure), signal theory (undervalued company more inclined to internal equity incentives, let investors aware that the current company price relative to its internal value deviation) and major shareholders self-interest theory. From the theoretical point of view, this paper discusses the possible motives and results of domestic listed companies to launch the stock ownership plan, in order to provide theoretical support for small and medium investors to rationally understand the employee stock ownership plan, and provide regulatory suggestions to the regulatory authorities to be vigilant about the self-interest behavior of major shareholders.