Description

the principle-agent dilemma involving several economic partners gained a lot of attention. According to presented in the study, there is a conflict of interest because shareholders' ownership is divided from top management by management layers. Jensen and Meckling (1976) go on to elaborately explain and exemplify this hypothesis. According to the writers, managers always favour taking on duties to further their own interests over those of all stockholders, even at the expense of owners. From this vantage point, equity-based compensation schemes started to appear in the majority of publicly traded firms, with the intention of encouraging managers to make decisions taking the interests of shareholders into account. Employee stock ownership plans (ESOPs) have been the subject of much academic research on how they affect Since employees are motivated by equity-based pay, according to Cin and Smith's (2002) research in the South Korean market, it has been widely argued that ESOPs have a favourable impact on business performance. Furthermore, numerous scholarly studies, including those by the US GAO (1987), suggest that there will be a detrimental impact. The fact that different exciting studies used different sample collections and research methodologies does not make the conflicting research conclusions illogical. As a result, it is assumed in this research that the impact of ESOP differs depending on the level.

The current study adds to the body of knowledge in two different ways. In order to examine the relationship between ESOP and corporate financial success at various stages of sample firms' development, the research first uses a quantile regression model. The non-uniform effects of ESOP on business performance have been determined to be equivalent to the corporate life-cycle hypothesis. By particularly using the QR Stata module for panel data, we determine that for the majority of start-up businesses, ESOP could be considered a potent strategy to improve financial returns and save cash flow. Then, due to various corporate features, the effect of ESOP varies somewhat over the first half of the growth stage, and the favourable effects of ESOP drastically decrease as a firm embarks on expansion.