Chief executive officer positive framing and employee ownership

Abstract

Employee ownership is an important governance tool used to encourage employee participation and enhance employee productivity, but we know little about what encourages employee ownership. This study investigates the influence of chief executive officer (CEO) positive framing in public speeches on employee ownership. We propose that CEO positive framing can increase employee ownership when employees internalize CEOs' positive beliefs about firms' accomplishments and prospects. Using a sample of 664 U.S. listed firms from 2002 to 2018, we find that CEO positive framing increases employee ownership. In addition, the stock purchasing behaviors of top executives, analyst recommendations, and positive media coverage strengthen the effectiveness of CEOs' positive framing on employee ownership.Findings from this study advance employee ownership research by highlighting the vital role of CEOs' public language use in promoting employee ownership.

Do employees' views matter in corporate governance? The relationship between employee approval and CEO dismissal

“…We also included employee ownership as a control variable because it may influence CEO dismissal (Hollandts, 2018), and measured it as the percentage of firm stocks jointly owned by all nonexecutive employees. Following J. Li, Shi, and Dasborough (2021), we collected the employee ownership data from the U.S. Department of Labor Form 5,500 filings, which provide information of the total amount of a firm's common and preferred stock held by nonexecutive employees in employee stock ownership plans each year.…”

Is Chief Executive Officer optimistic belief bad for workers? Evidence from corporate employment decisions

“…McClean and Collins (2019) show that a combination of high-commitment HR practices and CEO charismatic leadership could result in low voluntary employee turnover and high firm performance. The evidence of higher employee ownership, which itself is a tool to encourage employee participation and enhance productivity, in firms with optimistic CEOs in Li et al (2021) suggests that optimism belief of CEOs can spread to employees. Furthermore, the well documented overinvestment by optimistic CEOs (as in Malmendier & Tate, 2005) also leads to higher capital expenditure, investment in human capital, and consequently higher employment growth.…”

“…However, there is little attention on how CEO optimism affects firms' employment decision. An exception is the recent work on employee ownership by Li et al (2021) who show that employees are more likely to purchase stock of their firms when CEOs use positive words in their speeches.…”

Non‐executive Employee Ownership and Target Selection in High‐Tech Mergers and Acquisitions

“…Independent variable. Employee ownership was measured as the percentage of a firm's total outstanding shares held by non-executive employees (Bova et al, 2014(Bova et al, , 2015Li et al, 2021;Wang et al, 2009). Our measure of employee ownership excluded managerial ownership, as prior studies have shown that managerial ownership can prevent firms from being targeted (Ambrose and Megginson, 1992;Ghosh and Ruland, 1998;Mikkelson and Partch, 1989;North, 2001;Song and Walkling, 1993), which differs from the effect of non-executive employee ownership.…”