The Relationship between Financial Participation and Other Forms of Employee Participation: New Survey Evidence from Europe

Abstract

This article explores the relationships between financial participation and other forms of participation drawing on data collected from listed companies in Finland, Germany, the Netherlands and the UK. The authors provide evidence on two questions. First, does the presence of either direct or indirect participation predict the use of profit sharing and employee equity plans? Second, to what extent is employee participation in profit sharing and equity plans influenced by the presence of other forms of participation? Overall, the results provide little evidence of complementarity between financial participation and other forms of participation. There are also clear differences between types of financial participation. It is found that indirect participation has a weak relationship with use of profit sharing and participation in profit sharing plans. Direct participation is not associated with the use of equity plans or profit sharing but with participation in stock acquisition plans. Employee participation in plan design is strongly associated with participation in profit sharing and stock acquisition plans but not stock options.

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