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Selling Company Shares to Reluctant Employees: France Télécom’s Experience (January 2004). [ Full Text ] Joint with Francois Degeorge, Alberto Moel and Peter Tufano.
Journal of Financial Economics Vol. 71 No. 1.
An earlier version of this paper was distributed as NBER Working Paper No. 7683 .

Abstract: 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.

JEL classification:  G11

Keywords: Privatization, employee ownership, portfolio choice

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