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

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  • Meng, Rujing
  • Ning, Xiangdong
  • Zhou, Xianming
  • Zhu, Hongquan

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.

Suggested Citation

  • Meng, Rujing & Ning, Xiangdong & Zhou, Xianming & Zhu, Hongquan, 2011. "Do ESOPs enhance firm performance? Evidence from China's reform experiment," Journal of Banking & Finance, Elsevier, vol. 35(6), pages 1541-1551, June.
    • Handle: RePEc:eee:jbfina:v:35:y:2011:i:6:p:1541-1551
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    Cited by:

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    4. Georgeta Vintila & tefan Cristian Gherghina, 2015. "Does Ownership Structure Influence Firm Value? An Empirical Research towards the Bucharest Stock Exchange Listed Companies," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 501-514.
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    8. Riaz, Fayyaz & Abdul Razzaq, Fiza & Waqar, Ahsan, 2017. "Effect of Employee Stock Ownership Plans (ESOPs) on the performance of Small business in Karachi," MPRA Paper 84322, University Library of Munich, Germany, revised 11 Nov 2017.
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    12. Lei Zhou & Feng Wei & Yu Kong, 2022. "Do Employee Stock Ownership Plans Affect Corporate Social Responsibility? Evidence from China," IJERPH, MDPI, vol. 19(3), pages 1-19, January.
    13. Maxwell Sandada & Kamunyaru Batanai Basil & Asphat Muposhi, 2016. "The Influence of Employee Share Ownership Schemes on Firm Performance: the Case of Zimbabwean Firms," EuroEconomica, Danubius University of Galati, issue 2(12), pages 37-50, April.
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