share plans

Employee Stock Purchase Plans: Gift or Incentive?

Many large listed firms offer workers the opportunity to buy shares in the firm at discounted rates through employee stock purchase plans (ESPP).  The discounted rate creates a gift exchange, where the firm hopes that workers who accept the gift reciprocate with greater loyalty and effort.  But ESPPs diverge from standard gift exchange or efficiency wage models.

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

Many firms encourage employees to own company stock through share plans that subsidise 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.