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Incentives, monitoring, and employee stock ownership plans: New evidence and interpretations

Pendleton, A. (2006) Incentives, monitoring, and employee stock ownership plans: New evidence and interpretations. Industrial Relations, 45 ( 4). pp. 753-777. ISSN 0019-8692

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Abstract

This paper reviews the theory and evidence for agency theory-based explanations for employee stock ownership plans found in the financial participation literature. The UK Workplace Employee Relations Survey 1998 is used to test whether share plans substitute for direct monitoring and individual incentives. Contrary to some predictions in the literature, individual incentives are found to be complements of share plans, while other measures of monitoring costs provide mixed results. However, it is found that monitoring costs and a wide range of performance targets explain the conjunction of stock plans and individual incentives. It is suggested that share plans are used to mitigate dysfunctional effects of individual incentives by engendering cooperation and trust, and by broadening the range and time frame of desired performance outcomes.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > The York Management School
Depositing User: York RAE Import
Date Deposited: 15 May 2009 13:46
Last Modified: 15 May 2009 13:46
Published Version: http://dx.doi.org/10.1111/j.1468-232X.2006.00450.x
Status: Published
Publisher: Blackwell Publishing Ltd
Identification Number: 10.1111/j.1468-232X.2006.00450.x
URI: http://eprints.whiterose.ac.uk/id/eprint/6366

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