Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/232063 
Year of Publication: 
2021
Series/Report no.: 
cege Discussion Papers No. 414
Publisher: 
University of Göttingen, Center for European, Governance and Economic Development Research (cege), Göttingen
Abstract: 
Many firms use equity-based profit sharing to boost participation in employee stock purchase plans (ESPPs). Using a large panel data set (N=262,824) of a multinational firm, we compare the reactions of former ESPP participants and non-participants to a profit sharing distribution (PSD). We find a dysfunctional effect. Although many former non-participants sign in, almost a similar share of employees leave the ESPP after the PSD. A closer look highlights the importance of social preferences when all employees enjoy profit sharing. Prosocial former participants show a motivational crowding out effect and leave the program, as the equity norm is violated.
Subjects: 
Employee Stock Purchase Plans
Gift Exchange
Motivational Crowding Out
NormViolation
JEL: 
D03
J24
J33
J54
M52
Document Type: 
Working Paper

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