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Broad‐based Employee Stock Options in US ‘New Economy’ Firms

Author

Listed:
  • James C. Sesil
  • Maya K. Kroumova
  • Joseph R. Blasi
  • Douglas L. Kruse

Abstract

This paper compares the performance of 229 ‘New Economy’ firms offering broad‐based stock options to that of their non‐stock option counterparts. A simple comparison of these firms reveals that the former have higher shareholder returns, Tobin’s q and new knowledge generation. Multivariate analysis using panel data also suggests that the adoption of a stock option plan results in higher levels of value added per employee. However, we do not find evidence that these plans result in superior growth in Tobin’s q or new knowledge generation.

Suggested Citation

  • James C. Sesil & Maya K. Kroumova & Joseph R. Blasi & Douglas L. Kruse, 2002. "Broad‐based Employee Stock Options in US ‘New Economy’ Firms," British Journal of Industrial Relations, London School of Economics, vol. 40(2), pages 273-294, June.
    • Handle: RePEc:bla:brjirl:v:40:y:2002:i:2:p:273-294
    DOI: 10.1111/1467-8543.00232
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    Citations

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    Cited by:

    1. David Marsden, 2004. "The Network Economy and Models of the Employment Contract: Psychological, Economic and Legal," CEP Discussion Papers dp0620, Centre for Economic Performance, LSE.
    2. Mónica Melle, 2005. "¿Cómo valora el mercado de valores español la adopción de planes de opciones sobre acciones para directivos y consejeros?," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 73-115, January.
    3. Kato, Takao & Kauhanen, Antti, 2013. "Performance Pay and Enterprise Productivity: The Details Matter," ETLA Working Papers 21, The Research Institute of the Finnish Economy.
    4. Shan, Yaping, 2019. "Incentives for research agents and performance-vested equity-based compensation," Journal of Economic Dynamics and Control, Elsevier, vol. 102(C), pages 44-69.
    5. Oyer, Paul & Schaefer, Scott, 2005. "Why do some firms give stock options to all employees?: An empirical examination of alternative theories," Journal of Financial Economics, Elsevier, vol. 76(1), pages 99-133, April.
    6. Erik Poutsma & Paul E. M. Ligthart & Roel Schouteten, 2005. "Employee Share Schemes in Europe. The Influence of US Multinationals," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 16(1), pages 99-122.
    7. David Marsden, 2004. "The ‘Network Economy’ and Models of the Employment Contract," British Journal of Industrial Relations, London School of Economics, vol. 42(4), pages 659-684, December.
    8. Ahrens, Carolin & Oehmichen, Jana & Wolff, Michael, 2018. "Expatriates as influencers in global work arrangements: Their impact on foreign-subsidiary employees’ ESOP participation," Journal of World Business, Elsevier, vol. 53(4), pages 452-462.
    9. Joseph R. Blasi & Richard B. Freeman & Christopher Mackin & Douglas L. Kruse, 2010. "Creating a Bigger Pie? The Effects of Employee Ownership, Profit Sharing, and Stock Options on Workplace Performance," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 139-165, National Bureau of Economic Research, Inc.
    10. James C. Sesil & Yu Peng Lin, 2011. "The Impact of Employee Stock Option Adoption and Incidence on Productivity: Evidence from U.S. Panel Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 50(3), pages 514-534, July.
    11. Koustubh Kanti Ray, 2016. "Employee stock option plan and firm performance: A quantile regression approach," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 6(6), pages 152-166, June.
    12. Nien-Chi Liu & Ming-Yuan Chen & Mei-Ling Wang, 2016. "The Effects of Non-Expensed Employee Stock Bonus on Firm Performance: Evidence from Taiwanese High-Tech Firms," British Journal of Industrial Relations, London School of Economics, vol. 54(1), pages 30-54, March.
    13. Emmanuel Petrakis & Panagiotis Skartados, 2018. "Strategic Profit–Sharing in a Unionized Differentiated Goods Duopoly," Working Papers 1801, University of Crete, Department of Economics.
    14. Fu Cheng & Chenyao Huang & Shanshan Ji, 2024. "The Impact of Employee Stock Ownership Plans on Capital Structure Decisions: Evidence from China," Mathematics, MDPI, vol. 12(19), pages 1-36, October.
    15. Fang, Hongyan & Nofsinger, John R. & Quan, Juan, 2015. "The effects of employee stock option plans on operating performance in Chinese firms," Journal of Banking & Finance, Elsevier, vol. 54(C), pages 141-159.
    16. Tariq Javed* & Mohd Faizal Basri, 2019. "Employee Ownership and Financial Performance of State-Owned Entities: A Mediating Role of Employee Loyalty," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(3), pages 640-645, 03-2019.
    17. Yeongjoon Yoon & Sukanya Sengupta, 2019. "The effect of employee share ownership on employee commitment and turnover: comparing the cases in Britain and South Korea and the role of the economy," Industrial Relations Journal, Wiley Blackwell, vol. 50(5-6), pages 486-516, November.
    18. Chen, Chao-Jung & Hsu, Chung-Yuan & Chen, Yu-Lin, 2014. "The impact of family control on the top management compensation mix and incentive orientation," International Review of Economics & Finance, Elsevier, vol. 32(C), pages 29-46.
    19. Geert Braam & Erik Poutsma, 2015. "Broad-Based Financial Participation Plans and Their Impact on Financial Performance: Evidence from a Dutch Longitudinal Panel," De Economist, Springer, vol. 163(2), pages 177-202, June.
    20. Seng Ratny & Yen Yat & Tian Gaoliang & Feng Hua & Soksamnang Keo, 2019. "The Impact Of Managerial Stock Option On Firm Performance: Evidence From China," Noble International Journal of Business and Management Research, Noble Academic Publsiher, vol. 3(3), pages 62-72, March.

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