Belarusian Economic Research and Outreach Center

Open Lecture ”Money left on the table: An analysis of participation in employee stock purchase plans”

On July 18, 2013 BEROC under the financial support of the Swedish International Development Cooperation Agency (SIDA) organized an open lecture by Dr. Ilona Babenko (Arizona State University) where she presented her paper “Money left on the table: An analysis of participation in employee stock purchase plans”.

The paper shows that employee stock purchase plans allow employees to purchase the company stock at a discount from the market price and resell it immediately for a sure profit. But 70% of individuals fail to take advantage of profitable risk-free investment opportunities provided by these plans. Authors find that non-participation is more likely among people who are unfamiliar with stocks, less educated, and make fundamental errors in valuing financial securities. The results suggest that compensation plans that require active decisions by individuals can result in poor financial outcomes for less-educated employees.