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ORIGINAL RESEARCH article

Front. Behav. Econ.
Sec. Behavioral Labor Economics
Volume 3 - 2024 | doi: 10.3389/frbhe.2024.1484468
This article is part of the Research Topic The Behavioral Economics of Job Search and Hiring View all articles

The Effects of Profit-Sharing Distributions on Employee Stock Purchase Plan Participation

Provisionally accepted
Jan Hennig Jan Hennig 1Rieke Hullmann Rieke Hullmann 2Holger Andreas Rau Holger Andreas Rau 2*Michael Wolff Michael Wolff 2
  • 1 University of Groningen, Groningen, Netherlands
  • 2 University of Göttingen, Göttingen, Germany

The final, formatted version of the article will be published soon.

    Firms use various forms of equity-based compensation to allow employees to participate in their success. We examine how an unannounced profit-sharing distribution (PSD) affects participation in Employee Stock Purchase Plans (ESPPs), which offer discounted shares. Using panel data from a multinational firm, we find counterbalancing effects of the PSD: while it attracts new participants to the ESPP, a similar share of former participants exit the program after receiving the distribution. This latter effect is particularly pronounced in countries characterized by higher average levels of prosociality. Our findings suggest that unexpected profit sharing can have heterogeneous effects on ESPP participation across different cultural contexts.

    Keywords: Employee stock purchase plans, Financial Incentives, intrinsic motivation, Social Preferences Employee Stock Purchase Plans, social preferences

    Received: 21 Aug 2024; Accepted: 06 Dec 2024.

    Copyright: © 2024 Hennig, Hullmann, Rau and Wolff. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.

    * Correspondence: Holger Andreas Rau, University of Göttingen, Göttingen, Germany

    Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.