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To join or not to join? Factors influencing employee share plan membership in a multinational corporation

Bryson, Alex and Freeman, Richard B. (2010) To join or not to join? Factors influencing employee share plan membership in a multinational corporation. CEP Discussion Papers, CEPDP1001. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

Many firms encourage employees to own company stock through share plans that subsidizethe price at favorable rates, but even so many employees do not buy shares. Using a newsurvey of employees in a multinational with a share ownership plan, we find considerablevariation in joining among observationally equivalent workers and explore the reasons for thevariation. Participation in the plan is higher the greater the potential pay-off from joining theshare plan, which indicates that rational economic calculations affect the decision to join. Butthere is also evidence that psychological factors affect the decision to join. Some nonmemberssay they intend to join in the future, which means they forgo the benefits ofimmediate membership. The proportion of workers who purchase shares varies acrossworkplaces beyond what we predict from worker characteristics. This suggests that coworkerbehavior influences decisions. Indeed, workers say that they pay most attention toother workers and little attention to company HR management in their decision on joining.

Item Type: Monograph (Technical Report)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2010 The Authors
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents
I - Health, Education, and Welfare > I2 - Education > I22 - Educational Finance
J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages; Payment Methods
J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J54 - Producer Cooperatives; Labor Managed Firms
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: CEPDP1001
Date Deposited: 28 Feb 2013 17:00
URL: http://eprints.lse.ac.uk/48915/

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