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Does employee ownership decrease agency costs? Evidence from French listed companies
[L'actionnariat salarié réduit-il les coûts d'agence? Le cas des entreprises françaises cotées]

Author

Listed:
  • Abdelnour Joseph

    (ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers)

  • Aubert Nicolas

    (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)

  • Campa Domenico

    (IUM - International University of Monaco)

Abstract

Employee stock ownership (ESO) is often associated with decreases in agency costs because it increases employees' satisfaction and attachment to their company and aligns the employees' and their firm's interests. Another stream of research argues that ESO may have the opposite effect on agency costs because it serves as a management entrenchment tool and leads to divergence between stakeholders. This paper examines the relationship between ESO and agency costs in France, a leading European country for ESO. Using a panel database of 125 firms over the period 2002–2016, we find an inverted U-shaped relationship between ESO and agency costs. This evidence highlights that low levels of ESO increase agency costs, consistent with managerial entrenchment mechanisms. The findings also suggest that beyond a certain point, ESO reduces agency problems because it links employees' wealth to their firm's success.

Suggested Citation

  • Abdelnour Joseph & Aubert Nicolas & Campa Domenico, 2022. "Does employee ownership decrease agency costs? Evidence from French listed companies [L'actionnariat salarié réduit-il les coûts d'agence? Le cas des entreprises françaises cotées]," Post-Print hal-03723164, HAL.
    • Handle: RePEc:hal:journl:hal-03723164
    DOI: 10.4000/fcs.10259
    Note: View the original document on HAL open archive server: https://hal.science/hal-03723164
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