Facoltà di scienze economiche

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

Degeorge, François ; Jenter, Dirk ; Moel, Alberto ; Tufano, Peter

In: Journal of Financial Economics, 2004, vol. 71, p. 169-210

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... Plus

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    Summary
    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.