The savings behaviour and decision-making of scheme participants in Save As You Earn employee stock ownership plans

This thesis makes a significant contribution towards an underdeveloped yet growing strand of research that has emerged in recent years seeking to identify which specific factors are most influential on the savings behaviour and decision-making of scheme participants in broad-based employee stock ownership plans. More specifically, this study conducts empirical analysis into a savings related share option scheme known as Save As You Earn in the pursuit of answering three key research questions. The first research question seeks to identify which factors best account for how much a scheme participant chooses to place within their plan. The second research question focuses on identifying which variables are shown to alter the concentration of monthly savings directed into Save As You Earn as a proportion of a scheme participant’s total monthly wealth. The final research question focuses on which determinants best explain decisions at the point of maturity, when scheme participants are faced with the opportunity to purchase shares in their employer or take the cash. In terms of the explanatory variables explored, this study includes measures for socio-demographic factors, employment-related attributes, motives for joining, attitudes towards their employer and job, risk preferences, perceptions of past share price movements and whether a scheme participant has received financial education. The research findings presented within this thesis are derived from conducting univariate, bivariate and multivariate statistical analysis upon a cross-section of two thousand and fifty one survey responses from ten separate companies from a across range of industries. While this study finds that some traditional economic factors are partially able to explain a scheme participant’s savings behaviour, the major academic contribution of this research is to document that financial literacy and financial education has a recognisable and notable impact on a scheme participant’s financial decision-making.