Does employee ownership improve labour investment efficiency? Evidence from European firms

Sami Adwan

Economics Letters, 2024, vol. 238, issue C

Abstract: This paper studies the impact of non-executive employee ownership on labour investment efficiency for a sample of European firms. It empirically documents a negative association between employee ownership and labour investment inefficiency, which serves an inverse measure of labour investment efficiency. This negative association is notably more pronounced for firms reporting higher discretionary accruals in their financial statements (i.e. firms with higher information asymmetry) and for those with a lower percentage of independent directors (i.e. firms with greater agency problems). As such, this paper offers evidence that employee shareholding enhances employment decisions through two channels: reduced information asymmetry and improved management monitoring.

Keywords: Labor investment efficiency; Employee ownership; Rank and file employees; Information asymmetry; Agency problems (search for similar items in EconPapers)
JEL-codes: G30 G31 J20 M51 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:238:y:2024:i:c:s0165176524002003

DOI: 10.1016/j.econlet.2024.111717

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