China: Employee Ownership Aids Performance of Publicly Traded Companies
Executive Director
A November 21 article in China Economic Net examines performance results for the first three quarters of 2016 and found that most public companies with employee stock plans saw an increase in profitability. Although the article uses the term "ESOP," Chinese ESOPs are more similar to U.S. stock purchase plans than to a U.S.-style ESOP. The article notes "Generally speaking, the companies who launch [an] ESOP are better in operating performance and more complete in information disclosure. At the same time, the launch of [an] ESOP also shows that the major shareholders, the board of directors, the senior executives and the board of supervisors of the company are confident of the company's current situation and its future development and have more energy for long." Of the 245 publicly traded companies with stock plans, 178 reported greater net profit growth than the prior year.