Money Left on the Table: An Analysis of Participation in Employee Stock Purchase Plans

Babenko, Ilona; Sen, Rik

doi:10.2139/ssrn.2166012

Cited by 16 publications

(51 citation statements)

References 38 publications

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“…Because ESPPs are typically open to all employees, we can be confident that the set of employees we analyze in each decision window is eligible to participate. In our sample, we find a participation rate of 43%, which is higher than the 30% rate reported by Babenko and Sen (2014). Some of the difference likely arises from employees at firms in our sample who never receive a grant of any kind from the firm, though some of it could also arise from our more recent sample period.…”

Section: Datacontrasting

confidence: 74%

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Learning from Coworkers: Peer Effects on Individual Investment Decisions

Ouimet¹,

Tate

2019

The Journal of Finance

107

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Section: Datacontrasting

confidence: 74%

“…Thus, we consider variation both in employees' decisions to participate and in their holding periods conditional on participation. Given the discount at which these shares can be purchased, combined with the flexibility to immediately sell the stake, we interpret failure to participate to be an investment mistake, as in Babenko and Sen (2014).…”

Section: Datamentioning

confidence: 99%

Learning from Coworkers: Peer Effects on Individual Investment Decisions

Ouimet¹,

Tate

2019

The Journal of Finance

107

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“…For both plans offered, participation is more likely among most job categories (including finance experts), female employees, more educated employees and less financially constrained employees. This first set of results is con-sistent with Babenko and Sen (2014). We find evidence of the mental accounting of company stock highlighted by Benartzi and Thaler (2001) since the characteristics related to portfolio performance are not the same for the ESPP, which is invested exclusively in company stock, and the diversified CSP.…”

Section: Introductionmentioning

confidence: 52%

“…Rapp and Aubert (2011) confirm these results in France. Babenko and Sen (2014) find that participation is more likely among employees who are familiar with stocks, more educated, less financially constrained, and those who make fewer errors in valuing financial securities. US employees can sell their discounted stocks at the market prize a day after buying them.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 87%

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Financial decisions of the financially literate

Aubert¹,

Kammoun²,

Bekrar³

2018

Finance

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This paper investigates the portfolio performance of the company-based savings of a cross section of approximately 30,000 employees of a listed French bank. We have detailed information about each job position in the bank, which enables us to study the employees' financial literacy, specific knowledge of the plans offered, and private information. These better-informed bank employees supposedly adopt behavior that is the closest to that of an informed rational investor. We explore the employees' portfolio performance in the savings plans and find that financial expertise and knowledge of the plans are related to participation in the plans offered by the company. Financial expertise is related to better employee stock purchase plan (ESPP) individual portfolio performance but not to the company-based savings plan (CSP) and the overall performance of the company's plans. For both offered plans, participation is more likely among the job categories (including finance experts), female employees, more educated employees and less financially constrained employees. We find evidence of the mental accounting of company stock highlighted by Benartzi and Thaler (2001).

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Employee participation in employee stock ownership plans: Cross‐level interaction effects of institutions and workgroup behavior

Oehmichen

Wolff

Zschoche

2017

Human Resource Management

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In this multilevel study, the authors investigate the influence of country‐level formal institutions and workgroup behavior on foreign subsidiary employees' participation in employee stock ownership plans (ESOPs). Based on the perspectives of bounded rationality, transaction cost theory, and psychological ownership, the authors argue that weak formal institutions restrain multinational enterprises from effectively implementing ESOPs due to reduced employee participation. However, the authors expect that workgroup behavior—more specifically, the participation of the workgroup's members and superiors in ESOPs—has a positive influence on employees' ESOP participation. Furthermore, the authors analyze whether cross‐level effects of institutions and workgroup behavior function as substitutes or complements. They empirically examine the ESOP participation of 185,291 foreign subsidiary employees in 28 countries. The results confirm the hypotheses about direct effects of weak institutions and workgroup behavior and additionally provide support for a complementary relationship between institutions and workgroup behavior.

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Money Left on the Table: An Analysis of Participation in Employee Stock Purchase Plans

Cited by 16 publications

References 38 publications

Learning from Coworkers: Peer Effects on Individual Investment Decisions

Learning from Coworkers: Peer Effects on Individual Investment Decisions

Financial decisions of the financially literate

Employee participation in employee stock ownership plans: Cross‐level interaction effects of institutions and workgroup behavior

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