Does employee ownership decrease agency costs? Evidence from French listed companies

L'actionnariat salarié réduit-il les coûts d'agence? Le cas des entreprises françaises cotées

Abdelnour Joseph, Nicolas Aubert () and Campa Domenico
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Abdelnour Joseph: ESSCA Research Lab - ESSCA - ESSCA – École supérieure des sciences commerciales d'Angers = ESSCA Business School
Campa Domenico: IUM - International University of Monaco

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Abstract: Employee stock ownership (ESO) is often associated with decreases in agency costs because it increases employees' satisfaction and attachment to their company and aligns the employees' and their firm's interests. Another stream of research argues that ESO may have the opposite effect on agency costs because it serves as a management entrenchment tool and leads to divergence between stakeholders. This paper examines the relationship between ESO and agency costs in France, a leading European country for ESO. Using a panel database of 125 firms over the period 2002–2016, we find an inverted U-shaped relationship between ESO and agency costs. This evidence highlights that low levels of ESO increase agency costs, consistent with managerial entrenchment mechanisms. The findings also suggest that beyond a certain point, ESO reduces agency problems because it links employees' wealth to their firm's success.

Keywords: Corporate governance; Employee stock ownership; Shared capitalism.; Agency costs; Audit fees; Coûts d’agence; Honoraires d’audit; Gouvernance d’entreprise; Actionnariat salarié; Partage du capital (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-acc and nep-cfn
Note: View the original document on HAL open archive server: https://hal.science/hal-03723164v1
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Published in Finance Contrôle Stratégie, 2022, 25 (3/4), ⟨10.4000/fcs.10259⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03723164

DOI: 10.4000/fcs.10259

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