Effects of employee stock ownership plans on firm performance – evidence from listed commercial banks of Vietnam

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.