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.
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Acknowledgements
We would like to thank the conference participants at the 15th World Symposium of the International Association for the Economics of Participation (2010), the European Academy of Management Congress (2007), and the 4th International Finance Conference (2007).
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Rapp, T., Aubert, N. Bank Employee Incentives and Stock Purchase Plans Participation. J Financ Serv Res 40, 185–203 (2011). https://doi.org/10.1007/s10693-011-0104-0
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DOI: https://doi.org/10.1007/s10693-011-0104-0