Profit-Sharing and the Financial Performance of Companies: Evidence from U.K. Panel Data

Sandeep Bhargava

Economic Journal, 1994, vol. 104, issue 426, 1044-56

Abstract: This paper examines the dynamic relationship between profit sharing and profitability in a sample of U.K. firms during the 1980s. The estimates indicate a positive short-run effect of the introduction of profit sharing schemes on the financial performance of companies. This relationship is evident even if unobserved firm-specific fixed effects and potential endogeneity of profit sharing are controlled for. Quite apart from its widely recognized influence on productivity and industrial relations, profit sharing is arguably a financially attractive option for firms. There is also evidence of the persistence of profitability in U.K. profit sharing firms. Copyright 1994 by Royal Economic Society.

Date: 1994
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