Do Employee Stock Ownership Plans Affect the Quest for Firm Profitability? Evidence from Tanzania.

Abstract

Objective: This research aims to examine the impact of Employee Stock Ownership Plans (ESOP) on the profitability of Tanzanian publicly listed firms. Design/Methods/Approach: The research utilized a longitudinal design by employing secondary data from firms listed in the Dar es Salaam Stock Exchange (DSE). The random effect model with two estimations was utilized to analyze data. Findings: Results suggest that ESOP has a positive and significant effect on a firm's quest for profitability. Originality: The originality or uniqueness of this study lies in providing further understanding from a different economic and cultural perspective and enhancing the results of academic studies in this area. Practical/Policy implication: For business owners, the results of this study can be used as a root from which they can have a reason to grow their own ESOP and increase their personal wealth. For policymakers, it is a base for policy formulation that will enhance the profitable tax base.