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To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation

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  • Alex Bryson
  • Richard B. Freeman

Abstract

Many firms encourage employees to own company stock through share plans that subsidize the price at favorable rates, but even so many employees do not buy shares. Using a new survey of employees in a multinational with a share ownership plan, we find considerable variation in joining among observationally equivalent workers and explore the reasons for the variation. Participation in the plan is higher the greater the potential pay-off from joining the share plan, which indicates that rational economic calculations affect the decision to join. But there is also evidence that psychological factors affect the decision to join. Some non-members say they intend to join in the future, which means they forgo the benefits of immediate membership. The proportion of workers who purchase shares varies across workplaces beyond what we predict from worker characteristics. This suggests that co-worker behavior influences decisions. Indeed, workers say that they pay most attention to other workers and little attention to company HR management in their decision on joining.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16292.

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Date of creation: Aug 2010
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Publication status: published as Bryson, A. and Freeman, R. B. (2010) 'To join or not to join? Factors influencing employee share plan membership in a multinational corporation', in T. Kato (ed.) Advances in the Economic Analysis of Participatory & Labor - Managed Firms, Volume 11 , pp.1 - 22, Emerald Group Publishing Limited (previously NBER Working Paper No. 16292, CEP Discussion Paper No. 1001 and NIESR Discussion Paper No. 361)
Handle: RePEc:nbr:nberwo:16292

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  1. Oyer, Paul & Schaefer, Scott, 2004. "Why Do Some Firms Give Stock Options To All Employees?: An Empirical Examination of Alternative Theories," Research Papers 1772r, Stanford University, Graduate School of Business.
  2. Glaeser, Edward L & Sacerdote, Bruce & Scheinkman, Jose A, 1996. "Crime and Social Interactions," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 507-48, May.
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  4. Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2005. "Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey," IZA Discussion Papers 1730, Institute for the Study of Labor (IZA).
  5. John W. Budd, 2008. "Does Employee Ignorance Undermine Shared Capitalism?," NBER Working Papers 14236, National Bureau of Economic Research, Inc.
  6. Matthew Rabin., 1997. "Psychology and Economics," Economics Working Papers 97-251, University of California at Berkeley.
  7. Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options," NBER Books, National Bureau of Economic Research, Inc, number krus08-1.
  8. Gary V. Engelhardt & Brigitte C. Madrian, 2004. "Employee Stock Purchase Plans," NBER Working Papers 10421, National Bureau of Economic Research, Inc.
  9. Bingley, P. & Walker, I., 2000. "Housing Subsidies and Work Incentives in Great Britain," The Warwick Economics Research Paper Series (TWERPS) 559, University of Warwick, Department of Economics.
  10. George A. Akerlof & Rachel E. Kranton, 2005. "Identity and the Economics of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 19(1), pages 9-32, Winter.
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