Employee ownership (EO) has gained increasingly significant attention from both business practitioners and policy makers in China. Through the examination of the implementation of EO by China's listed firms from 1992 to 2017 with a total of 3,396 firms and 36,559 firm‐year observations, we explored the relationship between EO implementation and firm performance. In general, we found that over time, EO firms outperform non‐EO firms in China, and the influence of EO is only different in nuanced aspects in different time periods according to the change of policies. The data from the most recent period, that is, 2014–2017, indicate that EO adopters have higher performance than matched non‐EO firms both before and after adoption, but the relative performance does not increase after adoption. We further examined the interactive effect between EO and executive stock ownership (ESO) schemes and found that the adoption of ESO weakens the positive relationship between EO and firm performance. Regarding different types of EO, we found lower performance in companies with high return rights but no control rights, and we found better performance when high return rights are combined with control rights. We suggested policy and managerial implications on the basis of the findings.

Over the past decade, China has intensified its anti-corruption efforts. On 21 December 2012, “Alcohol Consumption Prohibition at Military Functions” was announced, which made the consumption of high-end Chinese Baijiu decline. We apply principal-agent theory to analyze the potential substitution effect, and then, we apply the difference in difference model and event study method to test the substitution effect between Baijiu and foreign alcohol by using macro- and micro-data. The results indicate that, in response to the “Alcohol Ban”, the Chinese consume more imported wine and more expensive foreign spirits. What is more, the CARs of high-end alcohol companies listed on the U.S. stock market significantly increase. We conclude that there exist substitution effects after the “Alcohol Ban”, which is necessary for the government to comprehensively investigate when formulating policies, because it may partially weaken the effectiveness of the policy.