Selling Company Shares to Reluctant Employees: France Telecom's Experience

In 1997, France Telecom went through a partial privatization. Using a database that tracks over 200,000 eligible participants, we analyze employees’ decisions whether to participate; how much to invest; and what stock alternatives to select. The results are broadly consistent with a neoclassical model of investing behavior. We report four anomalous findings: (1) The firm specificity of human capital has a negligible effect on employees’ investment decisions; (2) the amount invested seems driven by different forces than the decision to participate, and we attempt to measure an apparent “threshold effect”; (3) employees “left on the table” benefits worth one to two months’ salary by failing to participate; and (4) most participants underweighted the most valuable asset.