Bank Employee Incentives and Stock Purchase Plans Participation
We investigate which factors influence 44,649 employees' decision to invest in a top retail banking group in France. We have two objectives: (i) to explore factors associated with the amount invested in the plan, and (ii) to explore whether these factors have same associations with the probability of investing more than the incentive pay i.e. being an active investor. Specifically, we focus on four parameters that have been shown to affect participation: liquidity constraints, imperfect knowledge of the plan, asset choice, and transaction costs. We confirm Engelhardt and Madrian (Natl Tax J 57:385–406, 2004) assumptions according to which such factors contribute to explain non-participation. We show that ESPP contributors have very specific and unobserved motivations, as shown with the positive correlations between error terms in the two steps of investment decisions. The existence of unobservable investment motives can be explained by a lower risk aversion, a higher time preference, or a strong willingness to participate to corporate governance.
(This abstract was borrowed from another version of this item.)
Volume (Year): 40 (2011)
Issue (Month): 3 (December)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/journal/10693|
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.:
- Thaler, Richard H & Shefrin, H M, 1981.
"An Economic Theory of Self-Control,"
Journal of Political Economy,
University of Chicago Press, vol. 89(2), pages 392-406, April.
- Gale, William G & Scholz, John Karl, 1994.
"IRAs and Household Saving,"
American Economic Review,
American Economic Association, vol. 84(5), pages 1233-60, December.
- Gale, W.G. & Scholz, J.K., 1990. "Iras And Household Savings," Working papers 9009, Wisconsin Madison - Social Systems.
- Gale, W.G. & scholz, J.K., 1992. "IRAS and Household Saving," Papers 9244, Tilburg - Center for Economic Research.
- Gale, W.G. & Scholz, J.K., 1990. "Ira'S And Households Saving," Papers 16, California Los Angeles - Applied Econometrics.
- Degeorge, Francois & Jenter, Dirk & Moel, Alberto & Tufano, Peter, 2004.
"Selling company shares to reluctant employees: France Telecom's experience,"
Journal of Financial Economics,
Elsevier, vol. 71(1), pages 169-202, January.
- 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.
- François Degeorge & Dirk Jenter & Alberto Moel & Peter Tufano, 2000. "Selling Company Shares to Reluctant Employees: France Télécom's Experience," Working Papers hal-00598172, HAL.
- Degeorge, François & Jenter, Dirk & Moel, Alberto & Tufano, Peter, 2000. "Selling Company Shares to Reluctant Employees: France Télécom's Experience," CEPR Discussion Papers 2483, C.E.P.R. Discussion Papers.
- 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.
- Tullio Jappelli & Marco Pagano, 1994.
"Saving, Growth, and Liquidity Constraints,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 109(1), pages 83-109.
- Nicolas Aubert & Thomas Rapp, 2010.
"Employee's investment behaviors in a company based savings plan,"
Presses universitaires de Grenoble, vol. 31(1), pages 5-32.
- Nicolas Aubert & Thomas Rapp, 2010. "Employees' investment behaviors in a company based savings plan," Post-Print halshs-00454018, HAL.
- Luc Arrondel & André Masson, 2007. "Inégalités patrimoniales et choix individuels : des goûts et des richesses," Post-Print halshs-00754857, HAL.
- Nicolas Aubert & Thomas Rapp, 2008.
"Les salariés actionnaires:pourquoi investissent-ils dans leur entreprise?,"
Revue Finance Contrôle Stratégie,
revues.org, vol. 11(4), pages 87-110, December.
- Nicolas Aubert & Thomas Rapp, 2008. "Les Salariés Actionnaires : Pourquoi Investissent-ils dans leur Entreprise ?," Post-Print halshs-00454019, HAL.
- Jerry A. Hausman & James M. Poterba, 1986.
"Household Behavior and the Tax Reform Act of 1986,"
437, Massachusetts Institute of Technology (MIT), Department of Economics.
- Engelhardt, Gary V. & Madrian, Brigitte C., 2004.
"Employee Stock Purchase Plans,"
National Tax Journal,
National Tax Association, vol. 57(2), pages 385-406, June.
- Benartzi, Shlomo & Thaler, Richard H & Utkus, Stephen P & Sunstein, Cass R, 2007. "The Law and Economics of Company Stock in 401(k) Plans," Journal of Law and Economics, University of Chicago Press, vol. 50(1), pages 45-79, February.
- Tullio Jappelli, 1990. "Who is Credit Constrained in the U. S. Economy?," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 219-234.
- Gur Huberman & Sheena Iyengar & Wei Jiang, 2007. "Defined Contribution Pension Plans: Determinants of Participation and Contributions Rates," Journal of Financial Services Research, Springer;Western Finance Association, vol. 31(1), pages 1-32, February.
- Van de Ven, Wynand P. M. M. & Van Praag, Bernard M. S., 1981. "The demand for deductibles in private health insurance : A probit model with sample selection," Journal of Econometrics, Elsevier, vol. 17(2), pages 229-252, November.
- Richard H. Thaler & Shlomo Benartzi, 2004. "Save More Tomorrow (TM): Using Behavioral Economics to Increase Employee Saving," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages S164-S187, February.
- Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
When requesting a correction, please mention this item's handle: RePEc:kap:jfsres:v:40:y:2011:i:3:p:185-203. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.