Broad-based employee share ownership (ESO) plans are a widely used form of employee compensation. Past reviews have focused on employee attitudes and organizational performance, offering limited insight into why employees participate or the duration of their participation. Further, ESO is rarely considered as a dynamic phenomenon despite most plans being a continuing form of employee compensation. These omissions impede theoretical developments and advice to practitioners. In a review of 48 publications, across multiple disciplines, we propose an integrative framework that identifies the antecedents and mechanisms of three interrelated ESO participation decisions (i.e., buy, contributions, and holdings) within the context of employee stock purchase (and similar) plans. Building on this integrative framework, we propose an agenda for future research that we believe to be most promising for theory development and practice: the temporal dynamics of ESO participation, the influence of contextual (i.e., organizational-level) factors, and methodological innovations.

Organisations in many countries operate employee stock purchase plans. Research has focused on employees' current employee stock ownership (ESO) enrolment decision but, as plans are often ongoing forms of compensation, employees will likely have made the decision before. Drawing on the theory of habit, we investigate whether experience of enrolment decisions influences the current enrolment choice. We also consider how decision experience affects the decision-making process. Using employee-level data from two Australian companies, we find that the more an employee has made a particular choice in response to repeated company invitations, the more they are likely to repeat it. We also find that employees with prior experience of ESO enrolment decisions make a quicker decision whether to join or not. Those making the decision for the first time take longer and are more reliant on advice from others. The findings show that understanding share plan participation requires a temporal consideration of employee behaviour.

Studies of employee ownership (EO) have repeatedly cautioned that selection effects may be in part responsible for the apparent effects of EO on employee attitudes. Favourable attitudes among employee owners may result from individuals with positive views towards EO selecting into the company or the EO plan. Using data from a US employee stock ownership plan (ESOP), this study investigates whether EO as a factor in employment choice influences psychological ownership and preferences for working in EO firms in the future. The findings reveal that joining the company due to EO has a substantial, independent effect on psychological ownership beyond the influence of plan participation. The article quantifies the magnitude of this selection effect. Additionally, joining for this reason strongly impacts preferences for future employment in employee-owned firms.

Since its creation in 2014, the employee ownership trust (EOT) has become a widespread form of employee ownership in the UK, and has transformed the country's employee ownership scene. Given that it is over a decade since its inception into UK legislation, and with the EOT now firmly established as a key business succession tool, it is timely to take a closer, critical look at the role, characteristics, and potential dangers of the UK EOT model. This paper will briefly outline and discuss the key characteristics of EOTs, how the EOT came about, and why it has been so successful. Using several unique data-sets of UK employee-owned businesses, it will profile key features of EOTs, and show how the flexible approach of the EOT provides the potential to sidestep many of the obstacles faced by other forms of employee ownership.

The article focuses on decisions to exercise and hold company stock at the maturity of a broad-based employee stock options plan. It investigates why some participants choose an uncertain and risky future reward when an immediate and certain increase in wealth could be secured at exercise. It draws on and expands the "mixed gambles" perspective in behavioral agency theory, utilizing a combination of stock price data and employee survey data from British companies with tax-approved stock option plans. It is found that the decision to take a gamble is influenced (negatively) by the extent of stock price lows (relative to prices at exercise) in the year prior to exercise, and by the risk preferences of the option holder. The findings contribute to further development of the "mixed gambles" perspective as an explanation of stock option behavior, showing that individual characteristics as well as some stock price movements affect behavior.

Purpose – A range of studies have shown that performance is typically higher in organisations with employee share ownership (ESO) schemes in place. Many possible causal mechanisms explaining this relationship have been suggested. These include a reduction in labour turnover, synergies with other forms of productivity-enhancing communication and participation schemes, and synergies with employer-provided training. The paper aims to discuss these issues. Design/methodology/approach – This paper empirically assesses these potential linkages using data from the 2004 and 2011 British Workplace Employment Relations Surveys, and provides comparisons with earlier analyses conducted on the 1990 and 1998 versions of the survey. Findings – Substantial differences are found between the 2004 and 2011 results: a positive relationship between ESO and workplace productivity and financial performance, observed in 2004, is no longer present in 2011. In both years, ESO is found to have no clear relationship with labour turnover, and there is no significant association between turnover and performance. There is, however, a positive moderating relationship with downward communication schemes in 2004 and in 2011 in the case of labour productivity. There is no corresponding relationship for upward involvement schemes. Research limitations/implications – The results are only partially supportive of extant theory and its various predictions, and the relationship between ESO and performance seems to have weakened over time. Originality/value – The study further questions the rhetoric offered in support of wider ESO.

PurposeThe paper traces the development of employee ownership in the UK since the 1980s. It proposes that employee ownership is a function of macro-level contexts and micro-level decisions, with the latter framed and guided by the former. The macro context comprises the regulatory framework and the provision of incentives to adopt employee ownership. The paper shows how the evolution of these has led to a steep increase in employee ownership in the last eight years.Design/methodology/approachThe paper draws on several sources of empirical data to chart the development of employee ownership in the UK since the 1980s and to identify the current features of employee ownership. Two firm-level surveys conducted in 2015 and 2020/21 are supplemented by qualitative case study data collected in the early 1990s. An annual census of all employee-owned firms facilitates a comprehensive overview of the current state of UK employee ownership.FindingsIt is found that there has been a steep increase in the number of UK employee-owned firms since 2014 after several decades of uneven growth. This is attributed to the introduction of new incentives and to refinements of the regulatory framework. Over the period, there has been a shift from hybrid employee ownership, combining direct and indirect forms, to indirect ownership associated with the employee ownership trust model.Originality/valueThe paper provides an original history of employee ownership in the UK using rich and unique data, along with the most comprehensive picture of current employee ownership to date.

This paper analyses the impact of activist hedge funds (AHFs) on post-merger workforce downsizing and operating performance. AHFs have been widely criticized for achieving short-term gains at the expense of other stakeholders, such as employees. The results show that AHF ownership and presence in acquiring firms is a significant determinant of post-merger employment reductions. There is little evidence that these mergers and acquisitions have better operating performance relative to other takeovers. However, there is a negative effect of AHF ownership on labour productivity. Overall, the results are consistent with the view that AHF involvement in takeovers does not lead to sustained gains in performance.

The paper examines the extent and potential reasons for non-exercise of 'in the money' stock options, drawing on employee-level data from the UK Save-As-You-Earn stock option plan.14 per cent of participants choose not to exercise, and failure to exercise in these circumstances can be costly in terms of foregone increases in wealth.Lesser experience of the option plan, perceived lack of financial knowledge, and greater reliance on friends for advice is associated with failure to exercise.These findings offer challenges to the use of sophisticated reward and benefit schemes by companies when potential participants lack financial capabilities, and add to the literature by showing that financial literacy can remain problematic even when employees have surmounted initial obstacles to joining plans.

This paper considers whether gains made by shareholders from corporate takeovers are achieved at the expense of employees, as proposed by the 'wealth transfer' perspective. It analyses the contribution of employee lay-offs, along with employment and wage changes, to the takeover premium and abnormal share price movements. The analysis draws on a unique dataset of British takeovers, combining documentary, share price and accounting data. The results show that lay-offs planned at the takeover have either no effect or adverse effects on shareholder returns. Wages growth is positively, not inversely, related to shareholder returns from the second year after the takeover, whilst positive employment changes have a similar effect in the following year. Closer scrutiny indicates that labour and shareholders share gains when the firm does well, but share pain when it does not. There is evidence, therefore, that labour and shareholder interests can be complementary, rather than antagonistic, after takeovers.

This Policy Brief analyses the main forms by which workers are able to share in the profits and ownership of the companies they work in. It also examines the risks and opportunities of financial participation for workers and poses some questions about how practice should be regulated. Its main recommendations are that, where financial participation schemes exist, worker representatives should be involved in their design and governance, to ensure that safeguards are built in and workforce objectives are achieved.

This article compares insights into decision-making and behaviour developed by Kahneman and Tversky in behavioural economics with the main findings from studies of pay incentives in workplace sociology in the middle decades of the 20th century. The article shows how many of the insights offered by behavioural economists, such as loss aversion, were anticipated and considered by the workplace sociologists. It is argued that the sociological studies offer deeper and more convincing accounts of worker behaviour through a better understanding of the role of social structure, context, and social processes in framing and influencing action.

Cross-border mergers and acquisitions (M&A) are now a very substantial part of global mergers and acquisitions activity. The number of cross-border deals has increased steadily over the past twenty years and they now account for around 45 per cent of total M&A activity around the world (Erel et al. 2012). This growth can be attributed to a variety of factors, including globalisation and the increasing openness of many national business regimes. Within Europe it reflects the lowering of national obstacles as part of the European Union strategy to create a single market. The Cross-border Mergers Directive (CBMD) is one element of this strategy, alongside the objective of facilitating corporate restructuring to encourage growth and innovation.

This chapter questions why legislation has been more forthcoming in some countries than others, given that the availability of fiscal benefits to companies and employees is an extremely important influence on the use of financial participation schemes. The authors discuss the main forms of financial participation, presenting survey evidence on the incidence of financial participation in Europe and further afield. They conclude with a reflection on the reasons for differences between countries in the character and incidence of financial participation. Country profiles of financial participation practices are presented.

The article considers the reasons for employees holding large proportions of their financial savings and investments in company stock, drawing on explanations proposed in the behavioral finance literature. Utilizing data from a survey of employees participating in the United Kingdom Save as You Earn stock options and savings scheme, it is found that substantial proportions of stock owners hold sizeable concentrations of employer stock. Several explanations for this risky behavior are tested, with familiarity, reciprocity, and inertia found to be associated with portfolio concentration. Organizational commitment and “naïve extrapolation” from recent stock prices are not. The implications for theory and practice are considered.