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Abstract

While some authors propose that the existence of an ESOP will add to firm value by aligning the incentives of employees with those of the shareholders, others argue that ESOP participants will use their ownership voice to push for increasing wages and benefits, to the detriment of the shareholders. Previous empirical tests of ESOP performance effects have yielded mixed results. In this paper, we attempt to reconcile the differences by comparing publicly traded ESOP firms to size- and industry-matched peer firms using a matched-pair methodology consistent with that of Spiess and Affleck-Graves (1995) and Barber and Lyon (1997).Specifically, we investigate whether the existence of an ESOP does, in fact, affect public-firm performance and condition in a positive way. By comparing our sample of publicly-traded ESOP firms with their non-ESOP peers, we discover significant differences in operating performance generally favoring the ESOP firms. Most notable are the findings that ESOP firms generally have lower risk, manage growth more conservatively, and have higher return on assets than do non-ESOP publicly-traded companies, all of which support the arguments in favor of incentive alignment and the value of the "ownership culture".
... For example, Blasi, Conte, and Kruse (1996) found firms with more than 5% employee stock ownership achieved a higher growth of return on assets (ROA), return on equity (ROE), and profit margin than companies that did not. Stretcher, Henry, and Kavanaugh (2006) ...
... For example, found firms with more than 5% employee stock ownership achieved a higher growth of return on assets (ROA), return on equity (ROE), and profit margin than companies that did not. Stretcher, Henry, and Kavanaugh (2006) ...
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Research linking broad‐based employee stock ownership (BESO) with firm performance continues to receive considerable attention both in and outside the field of management. Despite the evidence being generally positive regarding the BESO–firm performance relationship, there has been a relative dearth of research providing insights into the circumstances surrounding the effectiveness of BESO. With this research gap in mind, we formulated and launched this special issue. This guest editor introduction begins with a look at the research on this topic, followed by a brief discussion of each article accepted for publication. We conclude by highlighting the major themes from the collective contributions of the articles and share insights regarding future research in this growing research domain.
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The article shows that the root of opportunistic behavior of employees in Russia is alienation of labor as employees are excluded from participation in property and management relations. The main reasons behind opportunism among employees are the discrepancy between the economic interests of the owners of labor-power (workers) and the owners of the means of production (employers), information asymmetry, and the fact that slacking often goes unnoticed in enterprises. The study relies on the data collected by the authors in a number of enterprises. Thus, the analysis brings to light the main factors that determine the tendency of workers to slack off and the scale of this problem in Russian enterprises and leads the authors to propose their own definition of the term “opportunistic behavior of workers”. The article discusses opportunistic behavior of employers, which is also a widely spread phenomenon. Employers’ opportunism may occur both before and after the conclusion of the employment contract and stems from the employer’ s desire to reduce labour costs. To a great extent such behaviour is caused by employers’ dominant position in relation to the vast majority of workers. Under the threat of unemployment, most workers are forced to agree to the conditions dictated by employers. Thus, the authors also propose a definition of the term “opportunistic behavior of employers”. The collapse of the North American company ENRON is considered as a practical example of harmful socio-economic effects of employer opportunism. The authors’ findings concerning the reasons behind opportunistic behaviour at work are further used to suggest ways of overcoming this problem. Keywords: opportunism, opportunistic behavior of employees, opportunistic behavior of employers, alienation of labor, overcoming opportunism of employees, values of corporate culture, stages to overcome opportunistic behavior of employees, concept to overcome opportunistic behavior of employees in Russian enterprises.
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