Title: The impact of employee stock ownership on firms' investments and market value

Authors: Andrew H. Chen, John W. Kensinger, R.D. Terrell

Addresses: Edwin L. Cox School of Business, Southern Methodist University, Dallas, TX 75275, USA. ' College of Business Administration, University of North Texas, Denton, TX 76203-3677, USA. ' National Graduate School of Management, Australian National University, ACT 0200, Australia

Abstract: Although, employee stock ownership may result in increased cash flows due to enhanced organisational productivity or improved governance, this benefit is counter-balanced by the increased risk premium due to a higher correlation between the returns to the firm and the returns to human capital in general. The analysis in this paper provides a framework for optimising employee incentives from stock ownership.

Keywords: employee stock ownership; firms| investments; market value.

DOI: 10.1504/IJSTM.2007.013921

International Journal of Services Technology and Management, 2007 Vol.8 No.4/5, pp.293 - 315

Published online: 04 Jun 2007 *

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