Abstract

http://ssrn.com/abstract=1687108
 
 

References (146)



 
 

Citations (7)



 


 



Employee Ownership and Firm Disclosure


Francesco Bova


University of Toronto - Rotman School of Management

Yiwei Dou


New York University (NYU) - Department of Accounting, Taxation & Business Law

Ole-Kristian Hope


University of Toronto - Rotman School of Management

September 24, 2013


Abstract:     
Evidence suggests that managers have an incentive to keep information opaque with the market when negotiating with employees who can extract above-market rents from the firm. We argue that employee ownership should mitigate this incentive to extract above-market rents and, in turn, alleviate the firm’s need to keep information opaque. Consistent with our expectations and using a number of proxies for disclosure, we find that firms whose non-manager employees have strong bargaining power provide less disclosure. However, this effect is mitigated, the greater the equity in company common stock held by non-manager employees. Our results suggest a novel capital market benefit to employee ownership. Specifically, employee ownership for non-manager employees appears to benefit the firm by not only aligning goals between the firm and its employees, but by also increasing disclosure from the firm to all of its stakeholders by mitigating the firm’s need to keep information opaque.

Number of Pages in PDF File: 58

Keywords: Employee Ownership, Employee Bargaining Power, Disclosure, Research Design

JEL Classification: M10, M20, M40, M50, M51, P16, J20, J50, J51, J53, L21, G30

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Date posted: October 4, 2010 ; Last revised: September 24, 2013

Suggested Citation

Bova, Francesco and Dou, Yiwei and Hope, Ole-Kristian, Employee Ownership and Firm Disclosure (September 24, 2013). Available at SSRN: http://ssrn.com/abstract=1687108 or http://dx.doi.org/10.2139/ssrn.1687108

Contact Information

Francesco Bova
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
416-978-3985 (Phone)
Yiwei Dou
New York University (NYU) - Department of Accounting, Taxation & Business Law ( email )
40 West 4th Street
New York, NY 10012
United States
Ole-Kristian Hope (Contact Author)
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx
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