Bank Employee Incentives and Stock Purchase Plans Participation

Abstract : We investigate which factors influence 44,649 employees' decision to invest in a top retail banking group in France. We have two objectives: (i) to explore factors associated with the amount invested in the plan, and (ii) to explore whether these factors have same associations with the probability of investing more than the incentive pay i.e. being an active investor. Specifically, we focus on four parameters that have been shown to affect participation: liquidity constraints, imperfect knowledge of the plan, asset choice, and transaction costs. We confirm Engelhardt and Madrian (Natl Tax J 57:385–406, 2004) assumptions according to which such factors contribute to explain non-participation. We show that ESPP contributors have very specific and unobserved motivations, as shown with the positive correlations between error terms in the two steps of investment decisions. The existence of unobservable investment motives can be explained by a lower risk aversion, a higher time preference, or a strong willingness to participate to corporate governance.
Document type :
Journal articles
Complete list of metadatas

Cited literature [32 references]  Display  Hide  Download

https://halshs.archives-ouvertes.fr/halshs-01256781
Contributor : Nicolas Aubert <>
Submitted on : Monday, January 18, 2016 - 10:52:09 AM
Last modification on : Friday, April 26, 2019 - 10:10:03 AM
Long-term archiving on: Tuesday, April 19, 2016 - 10:11:33 AM

File

RAPP AUBERT 2011 final.pdf
Files produced by the author(s)

Identifiers

Collections

Citation

Thomas Rapp, Nicolas Aubert. Bank Employee Incentives and Stock Purchase Plans Participation. Journal of Financial Services Research, Springer Verlag, 2011, ⟨10.1007/s10693-011-0104-0⟩. ⟨halshs-01256781⟩

Share

Metrics

Record views

212

Files downloads

260