Employee Investment Decisions about Company Stock

James J. Choi, David Laibson, Brigitte Madrian and Andrew Metrick

in Pension Design and Structure

Published in print July 2004 | ISBN: 9780199273393
Published online January 2005 | e-ISBN: 9780191601675 | DOI:
Employee Investment Decisions about Company Stock

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The decisions of nearly 100,000 individual 401(k) participants were studied to obtain a better understanding of the determinants of employee discretionary investment in company stock. High returns on company stock for the year prior to enrolment encouraged participations to make higher initial investments in company stock. The opposite is true for trading decisions. High past returns induced participants to shift their portfolios away from company stock towards other equities.

Keywords: employee investment; company stock; decision making; trading; investment behaviour; trading behaviour

Chapter.  6816 words.  Illustrated.

Subjects: Financial Markets

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