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The Productivity Effects of Employee Stock-Ownership Plans and Bonuses: Evidence from Japanese Panel Data

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Author Info
Jones, Derek C
Kato, Takao

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Abstract

The authors report the first results for Japanese firms on the effects of employee stock-ownership plans (ESOPs) and bonuses by estimating production functions using new panel data. They find that the introduction of an ESOP will lead to a 4-5 percent increase in productivity; this productivity payoff takes three to four years. There is a modest productivity gain from the bonus system. The authors also find evidence that the productivity effect of bonuses is enhanced by the existence of ESOPs, suggesting that ESOPs may create a climate conducive to profit-sharing by enhancing long-term commitment and peer monitoring. Copyright 1995 by American Economic Association.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 85 (1995)
Issue (Month): 3 (June)
Pages: 391-414
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Handle: RePEc:aea:aecrev:v:85:y:1995:i:3:p:391-414

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  1. Engellandt, Axel & Riphahn, Regina T., 2004. "Incentive Effects of Bonus Payments: Evidence from an International Company," IZA Discussion Papers 1229, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Oriana Bandiera (STICERD & LSE, 2004. "Relative and Absolute Incentives: Evidence on Worker Productivity," Econometric Society 2004 North American Summer Meetings 277, Econometric Society. [Downloadable!]
    Other versions:
  3. Chong-en Bai & Chenggang Xu, 1995. "Does Employee Ownership Improve Incentives for Efforts," Boston College Working Papers in Economics 303., Boston College Department of Economics. [Downloadable!]
  4. Derek C. Jones & Panu Kalmi & Mikko Mäkinen, 2006. "The Productivity Effects of Stock Option Schemes: Evidence from Finnish Panel Data," Discussion Papers 1026, The Research Institute of the Finnish Economy. [Downloadable!]
  5. Erik Poutsma & Paul E. M. Ligthart & Roel Schouteten, 2005. "Employee Share Schemes in Europe. The Influence of US Multinationals," Management Revue, Rainer Hampp Verlag, vol. 16(1), pages 99-122. [Downloadable!]
  6. Xiao-Yuan Dong & Derek C. Jones & Takao Kato, 2007. "Earnings-Tenure Profiles: Tests of Agency and Human Capital Theories Using Individual Performance Data," IZA Discussion Papers 3122, Institute for the Study of Labor (IZA). [Downloadable!]
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  7. Susan Helper & Morris M. Kleiner, 2007. "International Differences in Lean Production, Productivity and Employee Attitudes," NBER Working Papers 13015, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Moriguchi, Chiaki & Ono, Hiroshi, 2004. "Japanese Lifetime Employment: A Century's Perspective," EIJS Working Paper Series 205, The European Institute of Japanese Studies. [Downloadable!]
  9. Takao Kato, 2000. "The Recent Transformation of Participatory Employment Practices in Japan," NBER Working Papers 7965, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. John M. Abowd & Felipe Balmaceda & David Kaplan., . "Accounting Profits, Market Profits, and the Compensation of Regular Employees," ILADES-Georgetown University Working Papers inv119, Ilades-Georgetown University, Economics Department. [Downloadable!]
  11. Mikko Mäkinen, 2007. "Do Stock Opiton Schemes Affect Technical Inefficiency? Evidence from Finland," Discussion Papers 1085, The Research Institute of the Finnish Economy. [Downloadable!]
  12. Gregory K. Dow, 2000. "Allocating Control Over Firms: Stock Markets Versus Membership Markets," Discussion Papers dp00-03, Department of Economics, Simon Fraser University, revised Feb 2000. [Downloadable!]
  13. Derek C. Jones & Takao Kato, 2007. "The Impact of Teams on Output, Quality and Downtime: An Empirical Analysis Using Individual Panel Data," IZA Discussion Papers 2917, Institute for the Study of Labor (IZA). [Downloadable!]
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  14. Takao Kato & Motohiro Morishima, 1998. "The Productivity Effects of Human Resource Management Practices: Evidence from New Japanese Panel Data," Macroeconomics 9812003, EconWPA, revised 08 Dec 1998. [Downloadable!]
  15. Chong-En Bai & Chenggang Xu, 2001. "Ownership, Incentives and Monitoring," STICERD - Theoretical Economics Paper Series 413, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  16. Chiaki Moriguchi, 2003. "Did American Welfare Capitalists Breach their Implicit Contracts? Preliminary Findings from Company-level Data, 1920-1940," NBER Working Papers 9868, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. DEGEORGE, François & JENTER, Dirk & MOEL, Alberto & TUFANO, Peter, 2000. "Selling company shares to reluctant employees : France Télécom's experience," Les Cahiers de Recherche 703, Groupe HEC. [Downloadable!]
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  18. Derek C. Jones & Takao Kato, 2003. "The Effect of Employee Involvment on Firm Performance: Evidence from an Econometric Case Study," William Davidson Institute Working Papers Series 2003-612, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  19. Harry J. Paarsch & Bruce S. Shearer, 1996. "Piece Rates, Fixed Wages, and Incentive Effects: Statistical Evidence from Payroll Records," CIRANO Working Papers 96s-31, CIRANO. [Downloadable!]
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