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Employee ownership as a signal of management quality

Author

Listed:
  • Nicolas Aubert

    (DEFI - Centre de recherche en développement économique et finance internationale - GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • André Lapied

    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Patrick Rousseau

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

Abstract

The employees' decision to become shareholder of the company they work for can be a consequence of employers' matching contribution in company stock. From a behavioral perspective, employees would regard these contributions as an implicit investment advice made by their employer. This paper adopts another viewpoint. Since employee ownership can be used as an entrenchment mechanism, we suggest that employer's matching policy can be considered as an imperfect signal of management quality. This paper suggests that employee ownership can be used by managers to compensate their management skills to the market. It recommends that employee ownership policy should not be influenced by the managers.

Suggested Citation

  • Nicolas Aubert & André Lapied & Patrick Rousseau, 2010. "Employee ownership as a signal of management quality," Working Papers halshs-00534025, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00534025
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00534025
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    Keywords

    Employee ownership; corporate governance; management entrenchment;
    All these keywords.

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