Selling Company Shares to Reluctant Employees: France Telecom's Experience

Degeorge, Francois, Jenter, Dirk, Moel, Alberto and Tufano, Peter (2004) Selling Company Shares to Reluctant Employees: France Telecom's Experience. Journal of Financial Economics, 71 (1). pp. 169-202.

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In 1997, France Telecom went through a partial privatization. Using a database that tracks over 200,000 eligible participants, we analyze employees’ decisions whether to participate; how much to invest; and what stock alternatives to select. The results are broadly consistent with a neoclassical model of investing behavior. We report four anomalous findings: (1) The firm specificity of human capital has a negligible effect on employees’ investment decisions; (2) the amount invested seems driven by different forces than the decision to participate, and we attempt to measure an apparent “threshold effect”; (3) employees “left on the table” benefits worth one to two months’ salary by failing to participate; and (4) most participants underweighted the most valuable asset.

Item Type: Article
Keywords: Privatization; Employee ownership; Portfolio choice
Date Deposited: 25 Oct 2011 11:19
Last Modified: 07 Nov 2018 16:50

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