The Productivity Effects of Profit Sharing, Employee Ownership, Stock Option and Team Incentive Plans: Evidence from Korean Panel Data

Takao Kato, Ju Ho Lee () and Jang-Soo Ryu ()
Additional contact information
Ju Ho Lee: KDI School of Public Policy and Management
Jang-Soo Ryu: Pukyong National University

No 5111, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We report the first results for Korean firms on the incidence, diffusion, scope and effects of diverse employee financial participation schemes, such as Profit Sharing Plans (PSPs), Employee Stock Ownership Plans (ESOPs), Stock Option Plans (SOPs) and Team Incentive Plans (TIPs). In do doing, we assemble important new panel data by merging data from a survey of all Korean firms listed on Korean Stock Exchange which enjoys an unusually high response rate of 60 percent with accounting data from their corporate proxy statements. Our estimated fixed effect models of production functions reveal consistently that the introduction of a PSP or a TIP will lead to a significant increase in productivity (about 10 percent) whereas no such evidence found for ESOPs or SOPs. We also find that the productivity payoff appears to be more long-lasting for PSPs than for TIPs. Finally, our fixed-effect estimates suggest that PSPs and TIPs tend to be substitutes rather than complements in their productivity effects.

Keywords: Korea; profit sharing; productivity; stock option; team incentive; employee stock ownership (search for similar items in EconPapers)
JEL-codes: J24 J33 J53 M52 O53 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2010-08
New Economics Papers: this item is included in nep-eff and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published - published in: Tor Eriksson (ed.), Advances in the Economic Analysis of Participatory and Labor-Managed Firms Volume 11, Bingley: Emerald, 2010

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Chapter: The productivity effects of profit sharing, employee ownership, stock option and team incentive plans: evidence from Korean panel data (2010)
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