The Size of Employee Stakeholding in Large UK Corporations

17 Pages Posted: 29 Jan 1997

See all articles by Bruce A. Rayton

Bruce A. Rayton

University of Bath - School of Management

Jonathan S. Seaton

Loughborough University - Department of Economics

Date Written: November 1996

Abstract

The existing debate about policies designed to foster the development of a stakeholder economy in the UK have largely avoided a fundamental question. How large is the stake employees currently hold in their companies? This paper addresses this question using data from the Datastream database and finds that there is already a significant link between the pay of average employees and the performance of their firms. A doubling of firm value increases the pay of average employees in these firms by approximately 14 percent. Firms with explicit profit-sharing arrangements have a performance elasticity of approximately 0.32, while firms without explicit profit-sharing arrangements have a performance elasticity of only 0.11. This flexibility of pay is not limited to the explicit profit-sharing awards. Even after controlling for the levels of profit-sharing pay, the performance elasticity in the profit-sharing firms is 0.27.

JEL Classification: J32

Suggested Citation

Rayton, Bruce A. and Seaton, Jonathan S., The Size of Employee Stakeholding in Large UK Corporations (November 1996). Available at SSRN: https://ssrn.com/abstract=1157 or http://dx.doi.org/10.2139/ssrn.1157

Bruce A. Rayton (Contact Author)

University of Bath - School of Management ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Jonathan S. Seaton

Loughborough University - Department of Economics ( email )

York House
Loughborough LE11 3TU
Great Britain

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