Effectiveness of policy measures to promote employee share ownership programs in banks

We investigate the effectiveness of the national supportive policy suggested by the European Commission to promote employee share ownership programs (ESOP) in European banks. We find that supportive measures are effective to promote ESOP in widely-held banks, independently of their degree of opacity and the level of shareholder protection. However, supportive measures are only effective to promote ESOP in closely-held banks if they are more transparent or located in countries with higher levels of shareholder protection. Our findings indicate that European countries not only need to implement supportive measures but also to enhance transparency and shareholder protection to promote ESOP. To identify the causal effect between the national supportive policy and ESOP adoption, we use the number of labor-support-parties in parliament as the instrumental variable for the supportive measures.