Article Title

The Productivity Effects of Employee Stock-Ownership Plans and Bonuses: Evidence from Japanese Panel Data

Type of Work

Article

Date

6-1995

Journal Title

American Economic Review

Journal ISSN

0002-8282

Journal Volume

85

Journal Issue

3

First Page

391

Last Page

414

Abstract

The authors report the first results for Japanese firms on the effects of employee stock-ownership plans (ESOPs) and bonuses by estimating production functions using new panel data. They find that the introduction of an ESOP will lead to a 4-5 percent increase in productivity; this productivity payoff takes three to four years. There is a modest productivity gain from the bonus system. The authors also find evidence that the productivity effect of bonuses is enhanced by the existence of ESOPs, suggesting that ESOPs may create a climate conducive to profit-sharing by enhancing long-term commitment and peer monitoring.

Notes

Reprinted in:

Corporate Governance. Volume 4. Responses to Governance Issues. Edited by Kevin Keasey, Steve Thompson and Mike Wright. Cheltenham: Edward Elgar, 1999.

Japanese Business. Edited by Schon Beechler and Kristin Stucker. Critical Perspectives on Business and Management series. London: Routledge, 1998.

JEL Classification: J33, J24, J53

Hamilton Areas of Study

Economics

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