Understanding Employer's Stock Holdings in the French Company Savings Plans Using the Literature on the American 401(k) plans
AbstractThe collapse of sadly notorious American corporations whose retirement plans were primarily invested in company stocks has aroused a growing interest in understanding employees' investment decisions about company stock.American 401(k) plans and the French Company Savings Plans have in common to give employees the choice to invest among different kinds of funds. Some of them are invested in diversified portfolios whereas others are invested in company stocks.The goal of this paper is to understand why employees are willing to select funds invested in company stocks regardless of the basic recommendations of the portfolio choice theory.To better understand these choices, we should review the American literature, which emphasised their determinants in the context of the 401(k) retirement plans. These researches conclude that employees' choices are led by several rational and behavioural determinants: Employers' matching contributions in company stocks; an excessive extrapolation of past returns on company stock; employees' familiarity with their company or their loyalty to it; decision heuristics leading employees' choice among the different funds available.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00188518.
Date of creation: Nov 2006
Date of revision:
Publication status: Published, Gestion 2000, 2006, 6, 6, 61-77
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00188518/en/
Contact details of provider:
Web page: http://hal.archives-ouvertes.fr/
Employee ownership; 401(k);
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stulz, ReneM., 1988. "Managerial control of voting rights : Financing policies and the market for corporate control," Journal of Financial Economics, Elsevier, Elsevier, vol. 20(1-2), pages 25-54, January.
- Chaplinsky, Susan & Niehaus, Greg, 1994. " The Role of ESOPs in Takeover Contests," Journal of Finance, American Finance Association, American Finance Association, vol. 49(4), pages 1451-70, September.
- Degeorge, François & Jenter, Dirk & Moel, Alberto & Tufano, Peter, 2000.
"Selling Company Shares to Reluctant Employees: France Télécom's Experience,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
2483, C.E.P.R. Discussion Papers.
- Degeorge, Francois & Jenter, Dirk & Moel, Alberto & Tufano, Peter, 2004. "Selling company shares to reluctant employees: France Telecom's experience," Journal of Financial Economics, Elsevier, Elsevier, vol. 71(1), pages 169-202, January.
- Francois Degeorge & Dirk Jenter & Alberto Moel & Peter Tufano, 2000. "Selling Company Shares to Reluctant Employees: France Telecom's Experience," NBER Working Papers 7683, National Bureau of Economic Research, Inc.
- 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.
- Sangsoo Park & Moon H. Song, 1995. "Employee Stock Ownership Plans, Firm Performance, and Monitoring by Outside Blockholders," Financial Management, Financial Management Association, Financial Management Association, vol. 24(4), Winter.
- Brigitte C. Madrian & Dennis F. Shea, 2001.
"THE POWER OF SUGGESTION: INERTIA IN 401(k) PARTICIPATION AND SAVINGS BEHAVIOR,"
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 116(4), pages 1149-1187, November.
- Brigitte C. Madrian & Dennis F. Shea, 2000. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," NBER Working Papers 7682, National Bureau of Economic Research, Inc.
- Julie Agnew & Pierluigi Balduzzi & Annika Sundén, 2003. "Portfolio Choice and Trading in a Large 401(k) Plan," American Economic Review, American Economic Association, American Economic Association, vol. 93(1), pages 193-215, March.
- Gur Huberman & Sheena Iyengar & Wei Jiang, 2007. "Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates," Journal of Financial Services Research, Springer, Springer, vol. 31(1), pages 1-32, February.
- Brad M. Barber & Terrance Odean, 2001. "Boys Will Be Boys: Gender, Overconfidence, And Common Stock Investment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(1), pages 261-292, February.
- Beatty, Anne, 1995. "The cash flow and informational effects of employee stock ownership plans," Journal of Financial Economics, Elsevier, Elsevier, vol. 38(2), pages 211-240, June.
- Mitchell, Olivia S. & Smetters, Kent (ed.), 2003. "The Pension Challenge: Risk Transfers and Retirement Income Security," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199266913, October.
- Shlomo Benartzi & Richard H. Thaler, 1999. "Risk Aversion or Myopia? Choices in Repeated Gambles and Retirement Investments," Management Science, INFORMS, INFORMS, vol. 45(3), pages 364-381, March.
- Dhillon, Upinder S. & Ramirez, Gabriel G., 1994. "Employee stock ownership and corporate control: An empirical study," Journal of Banking & Finance, Elsevier, Elsevier, vol. 18(1), pages 9-25, January.
- Chang, Saeyoung & Mayers, David, 1992. "Managerial vote ownership and shareholder wealth *1: Evidence from employee stock ownership plans," Journal of Financial Economics, Elsevier, Elsevier, vol. 32(1), pages 103-131, August.
- Shlomo Benartzi & Richard H. Thaler, 2002. "How Much Is Investor Autonomy Worth?," Journal of Finance, American Finance Association, American Finance Association, vol. 57(4), pages 1593-1616, 08.
- Mitchell, Olivia S. & Utkus, Stephen P. (ed.), 2004. "Pension Design and Structure: New Lessons from Behavioral Finance," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780199273393, October.
- James J. Choi & David Laibson & Brigitte Madrian & Andrew Metrick, 2004. "Employees' Investment Decisions about Company Stock," NBER Working Papers 10228, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CCSD).
If references are entirely missing, you can add them using this form.