scholarly journals Employee Ownership

Management ◽  
2021 ◽  
Author(s):  
Frank Shipper ◽  
Joseph Blasi
Keyword(s):  
Organizational Performance ◽  
Wealth Inequality ◽  
Stock Option ◽  
Profit Sharing ◽  
Employee Ownership ◽  
Firm Level ◽  
Academic Interest ◽  
Employee Stock Option ◽  
Psychological Engagement ◽  
The Impact

Narrowly defined, Employee Ownership (EO) is a mechanism for employees to have a financial stake in the enterprise. It can take many forms, including Employee Stock Ownership Plans (ESOPs), worker-owned cooperatives, perpetual trusts, profit sharing, Employee Stock Option Plans, gain sharing, Employee Stock Purchase Plans (ESPPs), grants of restricted stock units (RSUs) and performance-based equity shares, phantom stock, and mutual companies. As this practice has developed, the term has come to mean both financial and psychological engagement in the enterprise. Contrary to the academic ideal of theory leading to practice, theories regarding EO have been derived often from practice. Early studies that looked at only financial engagement produced mixed results relative to organizational performance. More recent studies that have studied simultaneously the impact of financial and psychological engagement have provided strong evidence that collectively there is a significant impact between them and organizational performance. EO with a high psychological engagement has also been referred to as shared capitalism, shared entrepreneurship, and democratic capitalism. Regardless of the terminology when done well, they have produced positive results for the organization, employee-owners, and society. One reviewer of a book on EO compared it to a Swiss Army knife because the authors claimed that it could increase worker productivity and commitment, reduce income and wealth inequality, and improve firm performance, sustainability, and employment stability. EO in practice is not always capable of perfectly achieving its goals, and many of the practitioners talk about it being a journey. Academics working on understanding EO and how, when, and where it works may be able to help practitioners achieve these results and more by suggesting the conditions and contingencies under which it works or does not work to achieve firm-level, employee-level, and society-level outcomes. Before proceeding, one thing that may distinguish this bibliography from some of the others in this collection is the number of practitioner sources. EO predates the formalization of management as an area of academic interest. Even after the establishment of management as an area of academic interest, EO appears to have developed more from the practice of business than from academic theory. When practitioners do acknowledge academic theory as a source of guidance, they tend to blend multiple theories rather than a single overarching theory of EO.

Discretion in Financial Reporting: The Voluntary Adoption of Fair Value Accounting for Employee Stock Options

2004 ◽  
Vol 18 (2) ◽  
pp. 97-108 ◽  
Author(s):  
Dahlia Robinson ◽  
Diane Burton
Keyword(s):  
Financial Reporting ◽  
Fair Value ◽  
Stock Option ◽  
Employee Stock Options ◽  
Market Returns ◽  
Employee Stock Option ◽  
Accounting Reports ◽  
Voluntary Adoption ◽  
The Impact ◽  
Is Value

This paper investigates the market reaction to announcements by firms of their decision to adopt the fair value provisions of SFAS No. 123 in accounting for their employee stock option (ESO) expense. Additionally, this paper examines ESO usage and expense of adopting firms and compares the impact of the expense on profitability measures for adopting firms relative to a matched set of control firms. We find a positive and significant abnormal return in the three days around the adoption announcements, suggesting that the decision to expense using the fair value method is value relevant. The positive abnormal announcement returns are mainly attributable to the earlier announcements, consistent with early announcements serving as a credible signal of a commitment to transparency in financial reporting. We find evidence that in the three years prior to the announcement year, adopting firms report significantly higher earnings than control firms yet fail to earn higher market returns, suggesting that adopters stand to benefit the most by improving the market's perception of their accounting reports. We also find that ESO usage, ESO expense, and the impact of ESO expense on profitability are significantly lower for adopters relative to control firms, although the impact of ESO expense is economically significant for 43 percent of the adopters.

scholarly journals DAMPAK STRUKTUR MODAL PADA SENSITIVITAS PENERAPAN KOMPENSASI OPSI SAHAM KARYAWAN TERHADAP KINERJA

2017 ◽  
Vol 14 (1) ◽  
pp. 1
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Stock Options ◽  
Stock Option ◽  
Company Performance ◽  
Employee Stock Option ◽  
Sensitivity Level ◽  
The Impact ◽  
Option Compensation ◽  
Stock Option Compensation

This study aims to test whether the management that receive compensation in the form of stock options having an positive impact on company performance. This study considers the external performance measurement by identifying Cumulative Abnormal Return (CAR). In addition, this study aims to test whether the company's capital structure affects the sensitivity level of employee stock option compensation and firm performance. Capital structure is measured with debt to equity ratio. The result indicates that the proportion of Employee Stock Option Plan (ESOP) influence company performance in accordance with the predictions. This shows that the more stock options offered to employees then came a sense of belonging which resulted in more motivated managers to improve company performance. Furthermore, the higher the market performance of companies that can be achieved, the higher the profit (gain) will be obtained by the recipient of stock options. In addition, this study also shows that the impact of stock option grants at the company's performance declined with the greater capital structure of liability. This shows that the capital structure of liabilities will lower the sensitivity level of employee stock option compensation and firm performance. The higher the company's liabilities would reduce the rights of the owner of the dividends each period in accordance with the ownership of shares held since the company must take into account the interest costs to be paid to the creditor.

Accrual management and the decision to sell or hold shares acquired from the exercise of employee stock options

2020 ◽  
pp. 0000-0000
Author(s):  
Thomas Smith ◽  
G. Ryan Huston ◽  
Richard M. Morton
Keyword(s):  
Stock Option ◽  
Employee Stock Options ◽  
Short Term ◽  
Post Exercise ◽  
Employee Stock Option ◽  
Holding Period ◽  
Before And After ◽  
Accrual Management ◽  
The Impact

This study extends the employee stock option literature by examining the impact of accrual management, before and after stock option exercise, on the timing of sales of shares acquired at exercise. We find evidence that accrual management prior to exercise is positively associated with the decision to quickly sell shares after exercise, facilitating a short-term exercise-and-sell strategy. Alternatively, we find that, among executives initially choosing to hold at exercise, tax incentives appear to drive both post-exercise accrual management and the timing of sale transactions. Specifically, our results suggest that executives use income-increasing accruals during the holding period to bolster their stock option gains sand then sell immediately after satisfying the minimum (twelve month) holding period for long-term capital gain treatment. These results provide context for prior research that found evidence of earnings management leading up to option exercise on the expectation of an immediate sale.

New evidence of the relationship between employee satisfaction and firm economic performance

2015 ◽  
Vol 44 (6) ◽  
pp. 906-929 ◽  
Author(s):  
Santiago Melián-González ◽  
Jacques Bulchand-Gidumal ◽  
Beatriz González López-Valcárcel
Keyword(s):  
Firm Performance ◽  
Organizational Performance ◽  
Employee Satisfaction ◽  
Performance Outcomes ◽  
Firm Level ◽  
Content Type ◽  
Worker Satisfaction ◽  
The Impact ◽  
The Relationship ◽  
Level Performance

Purpose – Employee satisfaction appears in any discussion about how employees can contribute to organizational performance. The purpose of this paper is to test the relationship between employee satisfaction and organizational performance; this later measured with three firm-level performance outcomes (return over assets, operating margin, and revenue per employee). Design/methodology/approach – At different times and from two independent sources the authors obtained firms’ data about worker attitudes and financial and productivity performance, respectively. The analyzed sample of 475 firms is the biggest among the studies that analyze performance and employee satisfaction at the firm level. The impact of employee satisfaction over firm performance was assessed. Findings – Overall satisfaction and satisfaction with senior leadership, compensation, and work/life balance, respectively impact firm performance. Research limitations/implications – The ratings come from both employees and ex-employees and the individual characteristics were unknown. Additionally as an internet-based sample there has been a lack of control over the individuals’ response process. Practical implications – Managers have evidence about the importance of their employees’ satisfaction on firm performance, and on how the facets involved on worker satisfaction impact the performance. Social implications – Employer review web sites are increasing their popularity. However, unlike the marketing field with consumers HR area has not taken advantage of this trend. The found results may contribute to highlight the importance of this kind of data. Originality/value – Hitherto there is only one empirical evidence about the positive role of worker satisfaction in objective and financial firm level performance. That was based in best-firms type data. The current study draws in a big sample independent of this kind of rankings. Additionally, the job facet satisfaction conceptualization considered demonstrates the usefulness of this way to understand the employee satisfaction.

Employee involvement, financial participation and firm performance

2019 ◽  
Vol 2 (2) ◽  
pp. 115-132 ◽  
Author(s):  
Derek C. Jones ◽  
Niels Mygind ◽  
Patrick Sen
Keyword(s):  
Market Economy ◽  
Employee Involvement ◽  
Emerging Market ◽  
Profit Sharing ◽  
Employee Ownership ◽  
Content Type ◽  
Weak Evidence ◽  
Complementarity Hypothesis ◽  
The Impact ◽  
Financial Participation

Purpose The purpose of this paper is to investigate whether performance is enhanced if firms use employee involvement (EI) in decision-making and financial participation (FP) in an emerging market economy. Design/methodology/approach The authors use representative data for Estonian firms. The authors estimate diverse forms of production functions. Some are restricted to individual forms of EI (including membership on boards by nonmanagerial employees) or individual forms of FP (such as employee ownership and profit sharing). To investigate the complementarity hypothesis findings, the authors construct systems of EI and FP and estimate diverse specifications. Findings For individual forms of EI, cross-sectional estimates indicate that alone, typically such mechanisms have little impact. However, panel estimates do provide support for some forms of FP such as employee ownership and profit sharing increasing business performance. Tests of the complementarity hypothesis provide only weak evidence in support of the synergies between EI and FP. Research limitations/implications Together with the results from related studies, the findings support the more general finding that FP practices have positive effects on productivity; the limited impact of EI alone and weak evidence for complementarities suggest an important role for the institutional context in accounting for the effectiveness of the mechanisms underlying EI and thus to the differences in the impact of EI and FP across institutional contexts; reinforce findings from other studies of emerging market economies of inertia in EI and FP practices during early transition. Originality/value This is the first study for a former transition economy/emerging market economy that uses detailed information on EI and FP to investigate individual and complementary effects.

Congressional Intervention in the Standard-Setting Process: An Analysis of the Stock Option Accounting Reform Act of 2004

2007 ◽  
Vol 21 (1) ◽  
pp. 1-22 ◽  
Author(s):  
David B. Farber ◽  
Marilyn F. Johnson ◽  
Kathy R. Petroni
Keyword(s):  
Stock Options ◽  
Political Action ◽  
Fair Value ◽  
Stock Option ◽  
Financial Accounting Standards Board ◽  
Employee Stock Option ◽  
Setting Process ◽  
Action Committee ◽  
The Cost ◽  
The Impact

We examine H.R. 3574, the Stock Option Accounting Reform Act of 2004 (the Act), which sought to prevent the Financial Accounting Standards Board (FASB) from requiring the expensing of employee stock options at fair value. We find that employee stock option expense under the Act would be approximately 2 percent of what it would be under the FASB's preferred method. We also find that House members supporting the Act were more likely to be Republican, to be conservative, and to have received larger Political Action Committee (PAC) contributions. Finally, the larger the impact of H.R. 3574 on the amount of stock option expense reported by the firm for employees who are not top-five executives, the more contributions the firm's PAC made to House members and to members of the committee that approved the Act. This result suggests that corporate opposition to the mandatory expensing of stock options at fair value is not driven solely by concerns of top-five executives about the cost of recognizing their own options.

The Impact of Tax Incentives on the Choice to Hold Shares Acquired from Employee Stock Option Exercises

2012 ◽  
Vol 34 (2) ◽  
pp. 67-91 ◽  
Author(s):  
G. Ryan Huston ◽  
Thomas J. Smith
Keyword(s):  
Stock Options ◽  
Tax Incentives ◽  
Stock Option ◽  
Corporate Tax ◽  
Negative Relation ◽  
Employee Stock Option ◽  
Prior Literature ◽  
Tax Benefits ◽  
The Impact ◽  
Jel Classifications

ABSTRACT This paper extends prior stock option literature by examining the impact of individual and corporate tax incentives on the decision to hold or sell shares acquired through the exercises of incentive stock options (ISOs) and non-qualified stock options (NQSOs). We focus on factors found in prior literature to be associated with the choice to hold or sell in the context of the type of stock option exercised. Specifically, we find that the positive (negative) relation found in prior literature between the decision to hold shares following exercise and future returns (depth) is associated more with NQSOs than ISOs, consistent with individual tax incentives. Examining corporate tax incentives, we find that corporate tax benefits mitigate insiders' likelihood to hold shares obtained from ISO exercise. Furthermore, we find evidence that firms compensate employees to forgo individual tax benefits associated with holding shares from ISO exercise, and as this compensation increases, insiders are more likely to sell following exercise. JEL Classifications: H24; H25; J33.

scholarly journals THE PREVALENCE OF PERFORMANCE-RELATED PAY: A 23-COUNTRY EXAMINATION

2020 ◽  
Vol 4 (2) ◽  
pp. 111-128
Author(s):  
Fulya AYDINLI KULAK ◽  
Sevgi ELMAS ATAY
Keyword(s):  
Organizational Performance ◽  
Pay For Performance ◽  
Profit Sharing ◽  
Comparable Data ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data ◽  
Variable Pay ◽  
Country Clusters

This study intends to determine the current situation regarding the prevalence of pay for performance systems established for managers. Examining performance-related pay, we focus on individual, team and organizational performance and explore how widespread several pay components are in 23 countries. The research consists of the firm-level data of 5217 large companies from 23 countries from the Cranfield Network on Comparative Human Resource Management database. The data has been presented descriptively via frequencies and percentages and then analyzed via cluster analysis. In this way, diverging country clusters have been determined regarding the prevalence of pay for performance. Findings show that individual bonus is the most frequently used variable pay component provided to managers in general. Following that, paying for organizational performance is highly prevalent, whereas team-based bonuses are rarely used as a whole. On the other hand, long term incentives are rarely used except profit sharing. The results are descriptive in nature. This study addresses how widespread performance-related pay in various countries. Evidence regarding the use and prevalence of pay for performance systems across countries is quite limited. So this research, reflecting the current scene regarding variable pay in various countries, contributes to current literature by presenting recent comparable data.

scholarly journals DAMPAK STRUKTUR MODAL PADA SENSITIVITAS PENERAPAN KOMPENSASI OPSI SAHAM KARYAWAN TERHADAP KINERJA

2018 ◽  
Vol 14 (1) ◽  
Author(s):  
Nur Fadjrih Asyik
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Stock Options ◽  
Stock Option ◽  
Company Performance ◽  
Employee Stock Option ◽  
Sensitivity Level ◽  
The Impact ◽  
Option Compensation ◽  
Stock Option Compensation

This study aims to test whether the management that receive compensation in the form of stock options having an positive impact on company performance. This study considers the external performance measurement by identifying Cumulative Abnormal Return (CAR). In addition, this study aims to test whether the company's capital structure affects the sensitivity level of employee stock option compensation and firm performance. Capital structure is measured with debt to equity ratio. The result indicates that the proportion of Employee Stock Option Plan (ESOP) influence company performance in accordance with the predictions. This shows that the more stock options offered to employees then came a sense of belonging which resulted in more motivated managers to improve company performance. Furthermore, the higher the market performance of companies that can be achieved, the higher the profit (gain) will be obtained by the recipient of stock options. In addition, this study also shows that the impact of stock option grants at the company's performance declined with the greater capital structure of liability. This shows that the capital structure of liabilities will lower the sensitivity level of employee stock option compensation and firm performance. The higher the company's liabilities would reduce the rights of the owner of the dividends each period in accordance with the ownership of shares held since the company must take into account the interest costs to be paid to the creditor.

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