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Is employee ownership so senseless ?

Author

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  • 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)

  • Bernard Grand

    (CEROG - Centre d'Etudes et de Recherche sur les Organisations et la Gestion - Université Paul Cézanne - Aix-Marseille 3)

  • 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

    (CEROG - Centre d'Etudes et de Recherche sur les Organisations et la Gestion - Université Paul Cézanne - Aix-Marseille 3, AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence - AMU - Aix Marseille Université)

Abstract

Since Enron and the ruin of thousands of its employees, employee ownership is harshly criticized. Investing savings in employer's stock would be equivalent to bet on only one asset. Moreover, employee ownership's debated efficiency would not justify employers to grant company stock to their employees. Still, employee ownership is put in place by thousands of companies and withhold by millions of employees throughout the world. This paper considers a moral hazard setting where a risk neutral entrepreneur grants company stock to its risk averse employee as an incentive. We show that there is an optimal transfer of employee ownership that satisfies employee's risk preference and has an incentive effect. We thus bring about rational argument in favor of employee ownership.

Suggested Citation

  • Nicolas Aubert & Bernard Grand & André Lapied & Patrick Rousseau, 2009. "Is employee ownership so senseless ?," Post-Print halshs-00454017, HAL.
    • Handle: RePEc:hal:journl:halshs-00454017
    DOI: 10.3917/fina.302.0005
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00454017
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    References listed on IDEAS

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    Cited by:

    1. Aubert, Nicolas & Garnotel, Guillaume & Lapied, André & Rousseau, Patrick, 2014. "Employee ownership: A theoretical and empirical investigation of management entrenchment vs. reward management," Economic Modelling, Elsevier, vol. 40(C), pages 423-434.
    2. Thierry Poulain-Rehm & Xavier Lepers, 2013. "Does Employee Ownership Benefit Value Creation? The Case of France (2001–2005)," Journal of Business Ethics, Springer, vol. 112(2), pages 325-340, January.
    3. Zied Guedri & Xavier Hollandts & Nicolas Aubert, 2011. "Les| déterminants de la représentation des actionnaires salariés au conseil d'administration ou de surveillance," Post-Print hal-02312660, HAL.
    4. 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.

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