Effects of employee stock ownership plans on firm performance – evidence from listed commercial banks of Vietnam
-
DOIhttp://dx.doi.org/10.21511/bbs.18(2).2023.17
-
Article InfoVolume 18 2023, Issue #2, pp. 202-213
- 412 Views
-
254 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This study presents the effect of employee stock ownership plans on the firm performance of joint stock commercial banks in Vietnam. By using the Cobb-Douglas production function model and regression analysis model, combined with the use of financial statement data and Employee Stock Ownership Plan (ESOP) issuance reports of 18 banks listed on Ho Chi Minh and Hanoi stock exchanges from 2015 to 2019, it is found that ESOP had a positive impact on the performance of banks, but there was a lag of about two years. It can be seen that ESOP issuance has a positive effect on the financial ratios of joint stock commercial banks. Especially, the higher the issuance ratio in accordance to the size of a bank, the better the influence on the indices. Though there are many advantages of ESOP compared to traditional bonus programs, only eight joint stock commercial banks in Vietnam have applied ESOP. Banks in particular and businesses in Vietnam in general need to prepare knowledge and resources to expand and promote the true effectiveness of ESOP. From there, some suggestions and recommendations to make the ESOP program really effective for both employees, banks and shareholders will be given.
- Keywords
-
JEL Classification (Paper profile tab)G12, G14, G41, G30, G31
-
References33
-
Tables8
-
Figures0
-
- Table 1. Commercial joint stock banks listed in Vietnam (time: May 2020)
- Table 2. Results of the Cobb-Douglas production function model
- Table 3. Results of running Cobb-Douglas production function model (with lagged variable)
- Table 4. Regression results with ROA
- Table 5. ROA regression results (remove TETA variable)
- Table 6. Regression results with ROE
- Table 7. ROE regression results (remove TETA variable)
- Table 8. Regression results with NIM
-
- Bakan, I., Suseno, Y., Pinnington, A., & Money, A. (2004). The influence of financial participation and participation in decision-making on employee job attitudes. International Journal of Human Resource Management, 15(3), 587-616.
- Bryson, A., & Freeman, R. (2004). Doing the right thing? Does fair share capitalism improve workplace performance? (Employment Relations Research Series No. 81).
- Cao Dinh Kien, & Nguyen Van Bac. (2019). Ảnh hưởng của hoạt động phát hành cổ phiếu ưu đãi cho nhân viên lên hiệu quả hoạt động doanh nghiệp tại Việt Nam. Tạp chí Kinh tế đối ngoại số, 115, 74-82. (In Vietnamese).
- Curme, M., & Stefanec, N. (2007). Worker quality and labor market sorting. Economic Letters, 96(2), 202-208.
- Davidson, W., & Worrell, D. (1990). A Comparison and Test of the Use of Accounting and Stock Market Data in Relating Corporate Social Responsibility and Financial Performance. Akron Business and Economic Review, 21(3), 7-19.
- Freeman, R. B. (1978). Job satisfaction as an economic variable. American Economic Review, 68(2), 135-141.
- Green, C., & Heywood, J. S. (2008). Does performance pay increase job satisfaction? Economica, 75(300), 710-728.
- Hallock, D. E., Salazar, R. J., & Venneman, S. (2004). Demographic and attitudinal correlates of employee satisfaction with an ESOP. British Journal of Management, 15(4), 321-333.
- Hu, Y., & Izumida, S. (2009). The Relationship between Ownership and Performance: A Review of Theory and Evidence. International Business Research, 1(4), 72-81.
- Jones, D. C., & Kato, T. (1995). The productivity effects of employee stock ownership plans and bonuses: Evidence from Japanese panel data. American Economic Review, 85(3), 391-414.
- Kim, E. H., & Ouimet, P. (2009). Employee capitalism or corporate socialism? Broad-based employee stock ownership (Working Paper No. CES-WP-09-44). US Census Bureau Center for Economic Studies.
- Kramer, B. (2008). Employee ownership and participation effects on firm outcomes (Ph.D. Thesis). The City University of New York.
- Kruse, D., Blasi, J., & Freeman, R. (2011). Does shared capitalism help the best firms do even better? (NBER Working Paper No.17745).
- Kumbhakar, S. C., & Dunbar, A. E. (1993). The elusive ESOP productivity link: Evidence from U.S. firm-level data. Journal of Public Economics, 52(2), 273-283.
- Luu Huu Duc. (2014). Sở hữu cổ phần cho người lao động (ESOP) tại các Công ty niêm yết của Việt Nam. Tạp chí nghiên cứu tài chính kế toán, 5, 38-40. (In Vietnamese).
- Marsh, T. R., & McAllister, D. E. (1981). ESOPs tables: A survey of companies with employee stock ownership plans. Journal of Corporation Law, 6, 551-596.
- Mehran, H., Taggart, R. A., & Yermack, D. (1999). CEO Ownership, Leasing, and Debt Financing. Financial Management, 28(2), 5-14.
- Meng, R., Ning, X., Zhou, X., & Zhu, H. (2011). Do ESOPs enhance firm performance? Evidence from China’s reform experiment. Journal of Banking & Finance, 35(6), 1541-1551.
- Nguyen Minh Tam. (2009). Áp dụng giải pháp ESOP phù hợp để đảm bảo nguồn nhân lực giỏi trong các doanh nghiệp. Tạp chí quản lý Nhà nước, 163, 42-45. (In Vietnamese).
- O’Halloran, P. L. (2012). Performance pay and employee turnover. Journal of Economic Studies, 39(6), 653-674.
- Obiyathulla, I. B., Sharifah-Raihan, S. M. Z., Mohd-Eskandar, S. M. R., & Azhar, M. (2009). Granting Employee Stock Options (ESOs), Market Reaction and Financial Performance. Asian Academy of Management Journal of Accounting and Finance, 5(1), 117-138.
- Ohkusa, Y., & Ohtake, F. (1997). The Productivity Effects of Information Sharing, Profit-Sharing and ESOPs. Journal of the Japanese and International Economies, 11(3), 385-402.
- Park, R., Kruse, D., & Sesil, J. (2004). Does Employee Ownership Enhance Firm’s Survival? Advances in the Economic Analysis of Participatory & Labor-Managed Firms, 8, 3-33.
- Park, S., & Song, M. (1995). Employee stock ownership plans, firm performance, and monitoring by outside blockholders. Financial Management, 24(4), 52-65.
- Pugh, W. N., Oswald, S. L., & Jahera Jr., J. S. (2000). The effect of ESOP adoptions on corporate performance: are there really performance changes? Managerial and Decision Economics, 21(5), 167-180.
- Quarrey, M., & Rosen, C. (1987). How Well Is Employee Ownership Working? Havard Business Review.
- Robinson, A. M., & Wilson, N. (2006). Employee financial participation and productivity: An empirical reappraisal. British Journal of Industrial Relations, 44(1), 31-50.
- Sengupta, S., Whitfield, K., & McNabb, B. (2007). Employee share ownership and performance: golden path or golden handcuffs? International Journal of Human Resource Management, 18(8), 1507-1538.
- Sesil, J., Kroumova, M., Kruse, D., & Blasi, J. (2007). Broadbased employee stock options in the United States: company performance and characteristics. Management Revue, 18(1), 5-22.
- State Securities Commission (SSC). Audited separate financial statements, annual reports of joint stock commercial banks in Vietnam from 2015 to 2019.
- Trebucq, S., & d’Arcimoles, C.-H. (2002). The Corporate Social Performance - Financial Performance Link: Evidence from France (Working Paper No. 02-01).
- Yeo, G., Chen, S. S., Wai, H. K., & Cheng-few, L. (1999). Effects of Executive Stock Options on Shareholder Wealth and Firm Performance: The Singapore Evidence. The Financial Review, 34(2), 1-20.
- Zhu, Z., Hoffmire, Ja., Hoffmire, Jo., & Wang, F. (2013). Employee Stock Ownership Plans and Their Effect on Productivity: The Case of Huawei. International Journal of Business and Management Invention, 2(8), 17-22.