Assistant Professor of Finance
Research | Sloan Faculty Profile
Selling Company Shares to Reluctant Employees: France
Télécom’s Experience (January 2004). [ Full Text
] Joint with Francois Degeorge, Alberto Moel and Peter
Journal of Financial Economics
Vol. 71 No. 1.
An earlier version of this paper
was distributed as NBER Working Paper No.
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 our neoclassical model. 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 this "threshold effect"; (3) employees “left
on the table” one to two months’ salary by failing to participate; and (4)
most participants underweighted the most valuable asset.
JEL classification: G11
Keywords: Privatization, employee ownership, portfolio choice