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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. Möller, Iris, 2000. "Produktivitätswirkung von Mitarbeiterbeteiligungen (Productivity effect of employee participation in asset formation)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 33(4), pages 565-582. [Downloadable!]
  2. 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!]
  3. Moriguchi, Chiaki & Ono, Hiroshi, 2004. "Japanese Lifetime Employment: A Century's Perspective," EIJS Working Paper Series 205, The European Institute of Japanese Studies. [Downloadable!]
  4. Takao Kato, 2000. "The Recent Transformation of Participatory Employment Practices in Japan," NBER Working Papers 7965, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. 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, School of Economics and Bussines. [Downloadable!]
  6. Richard Freeman, 2008. "When Workers Share in Profits: Effort and Responses to Shirking," CEP Discussion Papers dp0882, Centre for Economic Performance, LSE. [Downloadable!]
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  7. Mikko Mäkinen, 2007. "Do Stock Opiton Schemes Affect Technical Inefficiency? Evidence from Finland," Discussion Papers 1085, The Research Institute of the Finnish Economy. [Downloadable!]
  8. 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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  9. DEGEORGE, François & JENTER, Dirk & MOEL, Alberto & TUFANO, Peter, 2000. "Selling company shares to reluctant employees : France Télécom's experience," Les Cahiers de Recherche 703, HEC Paris. [Downloadable!]
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  10. Douglas L. Kruse & Joseph R. Blasi & Rhokeun Park, 2008. "Shared Capitalism in the U.S. Economy? Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises," NBER Working Papers 14225, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. 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!]
  12. Dwyer, Douglas W., 1997. "Are Fixed Effects Fixed?," Working Papers 97-35, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  13. Robert Gibbons, 1997. "Incentives and Careers in Organizations," NBER Working Papers 5705, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. 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!]
  15. Oriana Bandiera (STICERD & LSE, 2004. "Relative and Absolute Incentives: Evidence on Worker Productivity," Econometric Society 2004 North American Summer Meetings 277, Econometric Society. [Downloadable!]
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  16. 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!]
  17. 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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  18. Orana Bandiera & Iwan Barankay & Imran Rasul, 2006. "Incentives for Managers and Inequality Among Workers: Evidence from a Firm Level Experiment," Natural Field Experiments 0015, The Field Experiments Website. [Downloadable!]
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  19. repec:sfu:sfudps:dp00-03 is not listed on IDEAS
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  20. 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!]
  21. 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!]
  22. 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)
  23. Orana Bandiera & Iwan Barankay & Imran Rasul, 2005. "Social Preferences and the Response to Incentives: Evidence from Personnel Data," Natural Field Experiments 0014, The Field Experiments Website. [Downloadable!]
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  24. 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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