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Journal of Financial Economics Vol. 71 No. 1 2004

Selling company shares to reluctant employees: France Telecom's experience

François Degeorge1,2; Dirk Jenter3; Alberto Moel4; Peter Tufano5

1 Centre for Economic Policy Research · 2 Università della Svizzera italiana · 3 MIT Sloan School of Management, Cambridge, MA 02142, USA · 4 Hong Kong University of Science and Technology · 5 Harvard Business School and NBER, Boston, MA 02163, USA

Abstract

In 1997, France Telecom went through a partial privatization. Using a database that tracks over 200,000 eligible participants, we analyze employees’ decisions whether to participate; how much to invest; and what stock alternatives to select. The results are broadly consistent with a neoclassical model of investing behavior. We report four anomalous findings: (1) The firm specificity of human capital has a negligible effect on employees’ investment decisions; (2) the amount invested seems driven by different forces than the decision to participate, and we attempt to measure an apparent “threshold effect”; (3) employees “left on the table” benefits worth one to two months’ salary by failing to participate; and (4) most participants underweighted the most valuable asset.

DOI
10.1016/s0304-405x(03)00184-3
Volume
71
Issue
1
Pages
169-202
Language
en
Sources
bibtex:phds-export.bib openalex crossref

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