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While multinational firms invest large amounts of money in employee stock ownership plans (ESOPs) to reduce turnover, there is little evidence regarding ESOPs' effectiveness in retaining rank-and-file employees and none on a global scale. Building on psychological ownership (PO) arguments, we predict that a rank-and-file employee's ESOP participati...
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... an indication consistent with our expectation, the matrix shows a negative correlation between ESOP participation and firm exit decisions. Table 4 presents the first-stage regression results of the 2SLS, in which we estimate employees' ESOP Participation using our IV (Financial Literacy) and control variables. We observe that, consistent with theory and prior research, Financial Literacy loads positively and significant (b ¼ 0.003, p < 0.01). ...Citations
... Stakeholderagency theory argues that the interests of employees are not always consistent with those of shareholders and managers (Hill and Jones 1992;Eisenhardt 1989), especially when faced with sustainable investments that may affect the short-term interests of employees (Kong et al. 2024). ESOPs, as medium to long-term incentive compensation through granting company shares to employees, play the role of "golden handcuffs" in balancing the interests of employees and the firm (Dasilas 2024), which helps to realize the joint formation of long-term orientation between employees and the company and focuses on the long-term value of the company (He et al. 2024;Hennig et al. 2023). For instance, based on the context of China's mixed ownership reform, Zhang et al. (2020) reveal that the implementation of ESOPs influences firms' R&D decisions. ...
... For example, Kim and Ouimet (2014) suggest that ESOPs can also engage in "free-rider" behavior that results in a limited role for ESOPs in improving firm performance. As such, Hennig et al. (2023) further investigate the inhibitory effect (1) Column (1) shows the results with Bloomberg's ESG scores replacing the dependent variable, column (2) displays the results of the regression using the employee ownership percentage as the independent variable, and column (3) reports the results of the analyses using the ordered logit model; ...
... This study proposes two mechanisms of action by which ESOPs affect corporate ESG performance: corporate long-term orientation and internal control quality. ESOPs can balance the conflict of interest between employees and the firm by providing employees with equity and transforming them into shareholders, forming a long-term orientation of the firm through interest bonding, thus enhancing corporate ESG performance (He et al. 2024;Hennig et al. 2023;Kong et al. 2024). Moreover, ESOPs can give full play to the initiative of employees and promote employee participation in corporate governance, thus enhancing corporate internal control quality, and thereby improving corporate ESG performance (Bova et al. 2015b;Hochberg and Lindsey 2010;Huang et al. 2019;Parmar et al. 2010). ...
Employee stock ownership plans (ESOPs), as institutional arrangements for enterprise owners to share the ownership of the enterprise and the right to future earnings with employees, facilitate the balance of stakeholders’ interests and stimulate employees’ motivation. Despite the attention and widespread practice of ESOPs by firms, their relationship with environmental, social, and governance (ESG) performance has not been explored yet. This paper examines the relationship between ESOPs and ESG performance using a sample of 13,299 firm-year observations from Chinese A-share listed firms between 2014 and 2021. The findings are as follows: (i) ESOPs have a positive impact on corporate ESG performance; (ii) ESOPs primarily enhance corporate ESG performance by fostering long-term orientation and improving internal control quality; (iii) from the internal governance perspective, the influence of ESOPs on ESG performance is particularly notable in firms with a small supervisory board size and a high level of agency costs; (iv) from the external environmental perspective, the impact of ESOPs on ESG performance is more significant in firms characterized by low market competition intensity and a favorable legal environment. This research reveals the effect of ESOPs in advancing corporate ESG performance and expands the literature on the motivation of stakeholders to drive corporate sustainability.
... which confirms that the instrument predicts the likelihood of having a CSO in the focal firm. Subsequently, to evaluate the strength of our instrument, we conduct the Stock-Yogo weak ID test (Hennig et al., 2023;Stock & Yogo, 2005), and see that our F-statistic exceeds the critical value of 16.38, which confirms that the instrument is strong. Our final approach is a 2SLS approach with instrumented main variables and subsequent interaction variables, firm-fixed effects, 1-year lagged independent variables, and firm-clustered robust standard errors. ...
... Fifth, we ran a fixed-effects panel regression without the use of our instrumental variable to get a feeling for the magnitude of the effect (Hennig et al., 2023). In our analysis, we see that the presence of a CSO remains to have a positive significant effect, and our attention-based structures mitigate the influence of the CSO. ...
More and more firms have a chief sustainability officer (CSO) to support the organizational focus on corporate social responsibility (CSR). Yet, there is much to learn about the boundary conditions that make the presence of CSOs particularly effective for firms’ CSR. Using an attention-based view lens, we investigate the relationship between having a CSO as attention carrier of CSR activities and examine the potential boundary conditions related to the three attention principles (attention selection, represented by board diversity; attention structures, represented by a CSR committee; and situated attention, represented by country-level CSR standards). We test our hypotheses using a global sample of 3,470 firms across 54 countries. Our results show that the influence of the CSO on internal and external CSR is most important in the absence of attention principles that may act as alternative attention carriers of CSR. In other words, attention principles form boundaries to the CSO’s influence on internal and external CSR. Our study contributes to research on the attention-based view, CSOs, and CSR.
... This involves helping employees to see what the need for the change is; what is driving the change? People need to know the context (Rabiul et al., 2022;Hennig et al., 2022;Jaiswal et al., 2022). Rabiul et al., (2022) state that change will not occur if a few people are on board with the idea. ...
The purpose of this study was to examine Kotter's leading change model at the Faculty of Education University of Khartoum with a major purpose of evaluating the contribution of this theory to enhance the importance and understanding of leading change at the University context. In doing so, a survey research design was employed. Among 239 staff members at the Faculty of Education University of Khartoum, data were collected from 106 (44.00%) respondents using questionnaire. Data collected were analyzed using one sample t-test. The result showed that creating a climate for change has been practised in the Faculty of Education University of Khartoum. The Faculty of Education University of Khartoum has engaged and enabled the whole organization in the change process. The findings also indicated that the Faculty of Education University of Khartoum has implemented and sustained change process. Hence, the implication of these findings adds to the understanding of how college officials ought to play a role model in embedding the change in their behaviors.
