{"title":"How employee share ownership plans impact firms' market value: A conflict of interest theory approach","authors":"Phan Huy Hieu Tran, Thu Ha Tran, Ji-Yong Lee","doi":"10.1111/emre.12584","DOIUrl":null,"url":null,"abstract":"<p>We investigated whether the market places a higher value on banks with employee share ownership plans (ESOPs) than on those without them. Using a variety of empirical models, we found that ESOPs increased the market value of banks. However, this positive effect occurred only when banks were transparent or located in countries with strong shareholder protection. Our findings demonstrated that if banks were opaque or shareholder protection was weak, outside investors' concerns about managerial entrenchment in widely held banks and behind-the-scenes relationships between majority shareholders and managers in closely held banks outweighed the perceived benefits of ESOPs. Our study contributes to the literature by proposing a novel approach to study the effects of ESOPs through the prism of conflict of interest theory. Our findings also shed light on stakeholders' rationales for opposing or adopting ESOPs.</p>","PeriodicalId":47372,"journal":{"name":"European Management Review","volume":"21 2","pages":"358-375"},"PeriodicalIF":3.4000,"publicationDate":"2023-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Management Review","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/emre.12584","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"MANAGEMENT","Score":null,"Total":0}
引用次数: 0
Abstract
We investigated whether the market places a higher value on banks with employee share ownership plans (ESOPs) than on those without them. Using a variety of empirical models, we found that ESOPs increased the market value of banks. However, this positive effect occurred only when banks were transparent or located in countries with strong shareholder protection. Our findings demonstrated that if banks were opaque or shareholder protection was weak, outside investors' concerns about managerial entrenchment in widely held banks and behind-the-scenes relationships between majority shareholders and managers in closely held banks outweighed the perceived benefits of ESOPs. Our study contributes to the literature by proposing a novel approach to study the effects of ESOPs through the prism of conflict of interest theory. Our findings also shed light on stakeholders' rationales for opposing or adopting ESOPs.
期刊介绍:
The European Management Review is an international journal dedicated to advancing the understanding of management in private and public sector organizations through empirical investigation and theoretical analysis. The European Management Review provides an international forum for dialogue between researchers, thereby improving the understanding of the nature of management in different settings and promoting the transfer of research results to management practice. Although one of the European Management Review"s aims is to foster the general advancement of management scholarship among European scholars and/or those academics interested in European management issues.