Determinants of Participation in Employee Share Ownership Plans in the Banking Sector: A Case of Listed Commercial Banks in Kenya
Keywords:
Determinants, Employee Share Ownership Plans, banking sector and commercial banks.Abstract
The purpose of the study was to examine determinants of participation in Employee Share Ownership Plans (ESOPs) of commercial banks listed at Nairobi Securities Exchange in Kenya. The specific objectives for the study was to determine the influence of company performance, demographic factors and financial orientation on employee participation in ESOPs. The study adopted qualitative research type and adopted descriptive research design. The target population are three commercial banks with an estimated total number of employee of 7469 as of 2018. The sample size for the study was 365 respondents. This was achieved through purposive sampling technique. The primary data was collected by questionnaires through drop and pick technique to those listed commercial banks in Nairobi County at their head offices and branches. Descriptive statistical tools were used to summarize, organize, interpret and present data. Statistical Package for Social Sciences (SPSS) software was used to analyze data. Data presented using figures, charts and tables. The regression model was used to establish relationship between the study dependent and independent variables. The study found that there was a positive correlation between employee participation in ESOP and company performance, financial orientation, ESOP design and demographic factors. Furthermore, the study also established that demographic factors contribute most to employee's participation in ESOP followed by financial orientation and ESOPs design while company performance contributed least to employee's participation in ESOP. The study recommended that companies planning to introduce ESOPs should consider demographic factors, financial orientation, ESOP design and company performance in that order. The study also recommended that a public policy should be formulated by the Government of Kenya to promote introduction of ESOPs in private and public companies in order to embrace sharing capitalism. Finally, employees should grasp the opportunity to invest in their company's ESOPs cautiously as it provides them with passive income with high risk and limited involvement in the company decision making.
Keywords: Determinants, Employee Share Ownership Plans, banking sector and commercial banks.
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