1. Developing an ownership culture with Employee stock purchase plans: Evidence from France Nicolas AUBERT Employee Ownership Research Network (EORN) IAE Aix-en-Provence Paul Cezanne University – Aix Marseille III

2. Introduction An ESPP, what for? Raise money Raise money Communicate on corporate strategy with employees Communicate on corporate strategy with employees Strengthen corporate culture (M&A) Strengthen corporate culture (M&A) How to measure the success of an ESPP Workforce participation proportion (% of the workforce) Workforce participation proportion (% of the workforce) Proportion of the issued equity subscribed by the employees (% of the equity issued) => total amount raised Proportion of the issued equity subscribed by the employees (% of the equity issued) => total amount raised The French context is favourable to EO 371 ESPPs since 1997 (French market authority) 371 ESPPs since 1997 (French market authority) The 30/12/2006 bill on employee ownership The 30/12/2006 bill on employee ownership Research question: What leads to an ESPP’s success?

3. 1 - Employees’ investment decision about their company’s shares Investment decision making theory (Markovitz, Merton, Samuelson, Modigliani Becker) Hypothesis: employees act like rational investor Employees’ characteristics Employees’ characteristics Risk aversion Total wealth & wealth’s components (Salary,Estate property,Human capital) Age Firm’s characteristics Firm’s characteristics Expected returns and standard deviation Beta coefficient Behavioural decision making (Kahneman & Tversky, Thaler, Benartzi) Hypothesis: employees are affected by cognitive biases Employees’ characteristics Employees’ characteristics Framings effects Endowment effect Firm’s characteristics Firm’s characteristics Past returns Endorsement effect

4. 2 – Data collection and methodology Data 14 experts supervising ESPPs of 32 listed firms in 24 sectors… 14 experts supervising ESPPs of 32 listed firms in 24 sectors… … working in a top 5 employee savings management company … working in a top 5 employee savings management company Methodology Qualitative: semi-structured interviews Qualitative: semi-structured interviews Content analysis Content analysis Coding techniques: categories and sub-categories are created Frequencies are reported Hypothesis: the repetition of words or expressions reveals the centres of interest and the preoccupations of the actors

5. 3 - Results Categories

6. 3 – Results (2) Sub-categories Leveraged funds ESPP's characteristicsInflows' origin Discount on share price Communi -cation Payment facilities Employees' characteristicsComplex Gain sharing bonusesTwenty percent Communi- cation Subcontractin g bank Cost Employer's contributions Profit sharing bonusesDiscount Credit ComplexityParticipation rate Withdrawal Leveraged fundsFrequency Payment facilities Capital guaranteed fundsDate

7. 4 – Discussion and conclusion Main results Emphasis on management’s commitment to Employee ownership Emphasis on management’s commitment to Employee ownership Offering an ESPP shows company’s commitment Communication and pedagogy Importance of financial incentives to stimulate participation Importance of financial incentives to stimulate participation Bonuses (discount or free credit) Relax short term liquidity constraint (leveraged funds or ESPP’s date) The study generates testable propositions The study generates testable propositionsLimits Sample: experts from one employee savings management company Sample: experts from one employee savings management company Future research Quantitative test Quantitative test

8. Marginal sub-categories creation and theoretical saturation Saturation “An adequate sample is determined by the judgment of the researcher, but occurs when further sampling fails to reveal additional categories” (Glaser & Weber, 2004)