Abstract

Employee Stock Ownership Plan (ESOP) is a company program to provide incentives to managers to increase shareholder wealth and to align interests between the shareholders and the management. This ESOP is one of the most effective efforts to reduce conflicts of interest between the owners and the managers. ESOP program is basically intended to provide motivation and incentives for employees, so that employees will have a sense of concern (sense of belonging) to the company. Productivity is a reflection of the level of efficiency and effectiveness of work in total in a company. Productivity becomes very important, because it can describe the performance of a company. Performance is defined as the size or level at which individuals and organizations can achieve goals effectively and efficiently. This study aims to examine the effect of ESOP variables on company performance by using productivity as a mediating variable in non-financial companies in Indonesia Stock Exchange. The sample used in this research is companies that implement ESOP in the period 2000–2015. In this study, the company’s performance is measured by using return on assets, return on equity and Tobin’s Q, while productivity is measured by using sales per employee, cash flow per employee, and total assets turnover. Based on the results, it can be concluded that Employee Stock Ownership Program (ESOP) has a positive and significant impact on productivity.

Highlights

  • Conflicts of interest may occur between the owner or shareholder and manager and employee, or between majority and minority shareholders

  • This study aims to examine the effect of Employee Stock Ownership Program (ESOP) variables on company performance by using productivity as a mediating variable in non-financial companies in Indonesia Stock Exchange

  • It can be concluded that Employee Stock Ownership Program (ESOP) has a positive and significant impact on productivity

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Summary

INTRODUCTION

Conflicts of interest may occur between the owner or shareholder and manager and employee, or between majority and minority shareholders. Company performance the company’s shares for the benefit of employees (Bonin, Jones, & Putterman, 1993) This approach According to the Minister of Finance of is an Employee Stock Ownership Program formu- Republic of Indonesia based on Decision No. lated by Luis Kelso, an investment banker who has 740/KMKOO/1089 dated June 30, 1989, what is a strong idea of a capitalist system that will become meant by performance is the achievement of the stronger if employ e es are included in the compa- company in a certain period, which reflects the ny’s stock ownersh ip. A com- based on the following criteria: companies that pany is called productive if it can achieve its implement ESOP in Indonesia Stock Exchange goals by transferring inputs to output at low cost. Employee share ownership (ESOP) tends to side Return on Equity measures the company’s ability with incumbent managers and increase employee to generate profits based on certain share capital.

Data analysis technique
Statistical description of research variables
Hypotheses testing
Findings
CONCLUSION
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