Determinants of Profit Sharing in the Finnish Corporate Sector

Laura Arranz-Aperte and Almas Heshmati ()
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Laura Arranz-Aperte: Swedish School of Economics and Business Administration, Arkadiankatu 22, FIN - 001 01 Helsinki, Finland

Indian Economic Review, 2004, vol. 39, issue 1, 55-79

Abstract: This study investigates the role of factors that determine individual employee's and firms participation in profit sharing schemes. Using a large panel data of Finnish employees for the period 1996-2000 we analyse individual and workplace characteristics that make firms employ profit sharing schemes and workers susceptible of receiving profit sharing bonuses. In particular two links between profit sharing schemes and workers performance have been analysed. First, in looking at profit sharing as an incentive device the results show a positive link between firm size and monitoring costs. Second, we find that younger individuals with higher mean salary and capacity to bear risk are more susceptible to profit sharing schemes. The industrial sector in which the individual is employed is also an important determinant factor. We find weak evidence of a relationship between performance of firms and employment of profit sharing schemes at the industrial sector level.

Keywords: Individual; Firm; Profit Sharing; Panel Data (search for similar items in EconPapers)
JEL-codes: C23 E24 J30 J41 (search for similar items in EconPapers)
Date: 2004
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Working Paper: Determinants of Profit Sharing in the Finnish Corporate Sector (2003)
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