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To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation

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  • Alex Bryson
  • Richard Freeman

Abstract

Many firms encourage employees to own company stock through share plans that subsidize the price at favorable rates, but even so many employees do not buy shares. Using a new survey of employees in a multinational with a share ownership plan, we find considerable variation in joining among observationally equivalent workers and explore the reasons for the variation. Participation in the plan is higher the greater the potential pay-off from joining the share plan, which indicates that rational economic calculations affect the decision to join. But there is also evidence that psychological factors affect the decision to join. Some nonmembers say they intend to join in the future, which means they forgo the benefits of immediate membership. The proportion of workers who purchase shares varies across workplaces beyond what we predict from worker characteristics. This suggests that coworker behavior influences decisions. Indeed, workers say that they pay most attention to other workers and little attention to company HR management in their decision on joining.

Suggested Citation

  • Alex Bryson & Richard Freeman, 2010. "To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation," CEP Discussion Papers dp1001, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1001
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    Cited by:

    1. Bryson, Alex & Clark, Andrew E. & Freeman, Richard B. & Green, Colin P., 2016. "Share capitalism and worker wellbeing," Labour Economics, Elsevier, vol. 42(C), pages 151-158.
    2. Alex Bryson & Andrew E. Clark & Colin Green, 2021. "Footsie, yeah! Share prices and worker wellbeing," Post-Print halshs-03467147, HAL.

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    More about this item

    Keywords

    share plans; share contributions; risk aversion; peer effects; social norms;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms

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