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Selling company shares to reluctant employees : France Télécom's experience

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  • DEGEORGE, François
  • JENTER, Dirk
  • MOEL, Alberto
  • TUFANO, Peter

Abstract

In 1997, France Télécom, the French telecommunications firm, went through a partial privatization or Opening of Shareholding. As part of this process, the government offered current and prior France Télécom employees the opportunity to buy portfolios of shares with various combinations of discounts, required holding periods, and levels of downside protection. We adapt a neoclassical model of investment decision-making that takes into account firm-specific human capital and holding period restrictions to predict how employees might respond to the share offers. Using a new database that tracks over 200,000 eligible participants, we analyze the employees' characteristics and their decisions regarding (a) whether to participate; (b) how much to invest; and (c) what form of stock alternatives they selected.

Suggested Citation

  • DEGEORGE, François & JENTER, Dirk & MOEL, Alberto & TUFANO, Peter, 2000. "Selling company shares to reluctant employees : France Télécom's experience," HEC Research Papers Series 703, HEC Paris.
    • Handle: RePEc:ebg:heccah:0703
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    More about this item

    Keywords

    Privatization; human capital; France Telecom; employee ownership; portfolio choice;
    All these keywords.

    JEL classification:

    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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