Expectancy Theory, Profit Sharing Plans and Accounting Information

Alireza Daneshfar
School of Business
University of New Haven
300 Orange Ave
West Haven, CT 06516

Tel: 203-931-6038
adaneshfar@newhaven.edu

1
 Expectancy Theory, Profit Sharing Plans and Accounting Information

Abstract:
Researchers in accounting have mainly focused on the use of financial information by investors,
financial markets, creditors and management. Although employees are classified as a group of users of
financial information, it is not clear how and in what extent employees are using accounting information.
On the theory base, there is less discussion about the theories which explain why and how accounting
information is useful to this group of users. This paper illustrates how the expectancy theory can explain
the usefulness of accounting information to employees. According to this theory, employees are rational
and information seekers who use relevant information to make proper decision and they use available
information to determine the plausibility of the compensation plans offered by the firm. Accounting
information is among the available information to employees. Therefore, accounting information could
explain employees’ behavior only if this information is correlated with their decision about compensation
plans. If this information could explain the employees’ behavior, then we should be able to develop a
prediction model and to identify informative factors. This paper investigates this issue by analyzing the
usefulness of accounting information to explain the behavior of the employees in adoption or rejection of
a profit sharing plan.

2
 I. Introduction
The use of corporate-based compensation plans such as profit sharing has been increased
recently in order to link the pay system with the firm’s performance. For example, the percentage of the
firms in the United States which have adopted profit sharing plan increases from 15% to 30% from
1945 to 1988 (Perry, 1998). In Canada, this percentage reaches to 25% in 1991 (Long, 1992). It is
expected that more firms will adopt a type of group-based compensation plan in the future. The group-
based compensation plans such as profit sharing, gain sharing, and stock ownership aim to direct
employees’ attention toward corporate performance rather than individual performance by linking the
employee’s compensation amount to the net income. The attractiveness of a group-based compensation
plan to employees, however, is not guaranteed at all the time. Under a group-based compensation plan,
employees have less control on the compensation amount as it is linked to the corporate performance.
On the other hand, they could benefit from the firm’s good performance when the firm’s earning power
is high. Studies in this area find that the success and attractiveness of the plan are affected by factors
such as corporate environmental factors (Heneman, 1990; Ungson and Steers, 1984; Ruh, Wallace and
Frost, 1973; White, 1970; and Graham-Moore and Ross, 1990). However, further studies are required
to provide a framework to analyze how employees use the available information to make their decision
about the plan as the previous studies in this area are explanatory in nature.
This paper extends our understanding about the use of accounting information in explaining one
of the challenging issues in the management-labor relationship. It contributes to the literature by focusing
on the use of accounting information in the area of employee compensation in several capacities: a)
current accounting literature has focused mainly on the use of accounting information by investors and in
capital markets. This study considers the use of accounting information by employees as another group
of the users who could be very important in the success of the firm. b) compensation studies have
focused on the executive compensation and the related issues. This study considers the employee
compensation plans which their cost and benefit could be significant to the firm. c) most of the studies
investigates the behavior of the participants in the framework of agency theory and focus on the factors
effective on the relationship between the principle and agent. This study adopts the framework provided
by expectancy theory and investigates how employees use the available information in their decision
making process. d) the model developed in this paper can help management to predict the employees’
reaction to a profit sharing plan and to assess the success of the plan before adopting the plan. In
addition, the model can help employees’ representatives to improve their decision in the process of
compensation negotiation.

II. Literature Review

Studies in the area of accounting information and profit sharing plan mainly investigate the
association between the firm’s characteristics and adoption of the plan. Bell and Hanson (1987) study
the relation between the firm’s performance, growth, and stock performance and find that firms with a
profit sharing plan have a higher level of profitability and growth. Magnan et al. (1997) conclude that
firms which adopted a profit sharing plan are larger, more efficient, and have growth in assets and
capital. Kruse (1996) studies why companies adopt profit sharing and ownership plans and he finds
evidence for productivity-related and flexibility, but not for unionized issues, tax liabilities, and hostile
takeover concerns. However, these studies do not show how employees and management use the
available information in order to make the decision about the acceptance or rejection of the plan.
3
 Studies which investigates the use of accounting information by employees argue that challenging
the accounting numbers is difficult for employees (Cooper and Essex (1977), Owen and Lad (1985),
Knights and Collinson (1987), Bougen (1989). Bougen et al. (1990). Bougen et al. (1990) find that
employees accepted accounting-based agreements in the 1890s and they rejected them in the 1920s.
Oakes and Covaleski (1994) argue that employees question whether they would benefit under the
income-based plan, but they do not challenge the science of accounting itself. They also find that
employees question the measurement of net income and net worth as these items are important in profit
sharing. Overall, the findings of this line of research indicate that employees are concern about
accounting information, but the way that they use this information is not clear. It requires more studies to
identify the relevant and useful information to employees and to provide a framework to understand how
this information is linked to the employees’ decision.

II. Expectancy Theory, profit sharing plans , and accounting information

According to expectancy theory, individuals react to a compensation plan based on their

expectation about the compensation. This theory assumes that people make rational decisions based on
economic reality (Vecchio and Appelbaum, 1995). This theory which was developed by Vroom (1964)
explains that motivation is function of three factors as the following:

M = f(E, P, V)
where M is the motivation level to achieve a specific goal, E is the level of belief that the effort results in
successful performance, P is the level of the belief that a successful performance results in an outcome,
and V is the valence of the reward to the employee.
Researchers in management such as Porter and Lawler (1968) and Schawab and Dyer (1973)
and more recently Green (1992), Kanungo and Mendonca (1992), and Fox, Scott, and Donohue
(1993) have studied the applicability of this theory in the workplace in different aspects. These studies
generally find that employees’ perception about compensation plans affects the success of the
compensation plan (motivator) and the factors which are effective on the employees’ perception about
the plan play an important role in shaping the employees’ perception. However, these studies focus
mainly on individual-based compensation plans and the factors which affect the individuals’ perception
about the plans. These studies do not include the corporate-based compensation plans and the factors
effective on the employees’ perception about these types of plans such as a profit sharing under which
the outcome is linked to the firm’s earning .
The expectancy theory can be used to illustrate the link between the employees’ expectation of
their outcome under a profit sharing plan and the informativeness of accounting information to identify
the effective factors on the employees’ expectation. Based on the first element in the expectancy theory,
employees should have the belief that their effort will result in the desired level of performance. In the
case of profit sharing plans, a benchmark income is usually set and any amount above the benchmark
will be considered for distribution. Therefore, the first element in the expectancy theory is related to this
argument that whether the benchmark is achievable. In this case, accounting information is useful if it
provides the evidence about whether the benchmark is achievable under a profit sharing plan. The
second element implies employees should have the belief that they will be rewarded when the desired
performance is achieved. This factor may be less important under a profit sharing plan because when the
plan is adopted, the distribution will be made according to the conditions of the plan and there is less
doubt about the payment. In addition, the union and employees’ representatives monitor the execution
4
of the plan. Therefore, it is reasonable to assume that this factor does not play a significant role in
construction of employees expectation about their outcome under a profit sharing plan. The third factor
indicates the level of the valence of the outcome to employees. The valence is referred to the
attractiveness and the value of the outcome to employees. In the case of profit sharing plans, the
outcome is a monetary payment which its valence to employees may depend on the comparability of the
outcome with the outcomes under other types of compensation plans. Therefore, accounting numbers
are informative if they provide information about the difference between the expected outcome under
the profit sharing plan and the expected outcome under other types of compensation plans.
According to this argument, this study concentrates on two factors in the expectancy theory: E
and V. According to expectancy theory, the higher levels of E and V are associated with higher levels of
employees’ positive reaction to a profit sharing plan. Identifying the factors which affect the employees’
perception about E and V is necessary to estimate the employees’ positive reaction. Accounting
information is useful if it provides evidence about these factors. As the relevant indicators are not readily
available, four financial factors are developed as the proxies for the elements of expectancy theory (E
and V) which are being studied in this paper. The first two indicators are the proxies for E and the other
two indicators are proxies for V.

III. Proxies for Element E in the Expectancy Theory

Proposition one: Risky environment

Expectancy theory explains that employees are concern about whether the desired performance
is achievable. If the probability of archiving a level higher than the benchmark is low, employees may not
react to the plan positively (element E in the expectancy theory). In the case of profit sharing plans, there
is no amount to be distributed if the annual income is equal or less than the benchmark. Therefore, the
deviation of the annual income from the benchmark may serve as a proxy for the probability of having a
positive compensation amount. A negative deviation implies that the probability of having zero amount of
compensation is high, and a positive deviation implies that the probability of receiving zero compensation
is low. This factor which is, hereafter, referred to as the level of risky environment is one of the factors
which underlies the employees’ perception about the profit sharing plan.
The deviation of income from the benchmark over a period of time (t) may be more appropriate
than deviation in a specific year. Therefore, the average of deviation for the period t is considered as the
proxy for the risky environment as the following:

ADj = 1/n ∑ nt=1(CNIt - BNIt)

where ADj is the average of deviation of net income form the benchmark in the period t,CNIt is net
income at time t, and BNIt is the benchmark net income under the plan.
Higher level of positive ADj is associated with lower level of risky environment and vase versa.
Accordingly, the employees’ positive reaction is associated positively with the positive level of ADj.
Therefore, the first proposition is constructed as the following:
Proposition (1): The probability of employees’ positive reaction to a profit sharing plan is associated

5
positively with the positive level of ADj.

Proposition two: Risky outcome

Fluctuation in the amount of net income makes the outcome under profit sharing plans different
from year to year. However, a permanent positive shock to earnings may result in an increase in the
expected outcome in the future. A transitory shock to earnings results in an increase in the expected
outcome in the short time, but it does not increase the possibility of permanent upward change in the
amount of future compensation. In contrast to temporary shocks, permanent positive shocks result in the
expectation of the higher future outcome. Therefore, the nature of changes in earnings may affect the
employees’ expectation of the future outcome differently. According to this discussion, the second
proposition is constructed as the following:
Proposition (2): The probability of the employees’ positive reaction to a profit sharing plan is positively
related with the level of the positive permanent shocks in earnings.
The next two financial indicators are proxies for the element V in expectancy theory (level of the valence
of the out come to employees under a profit sharing plan).

Proposition three: Expected Income

Under a profit sharing plan, the amount to be distributed to employees is positively related to the
company’s profitability. Therefore, employees are likely to react positively to the plan if it provides
employees with a positive incremental amount. The positive incremental amount is defined as the
difference between the expected amount under a profit sharing plan and the amount paid to employees
based on alternative compensation plans. This amount is calculated as follows:

EICtj = Et(NI tJ * rj) - ACtλ

where: EIC tj is expected incremental amount, Et is the operator of expected value at time t,
NI tj is net income which is the base for calculating the amount to be distributed under the profit
sharing plan, rj is the ratio to calculate the amount to be distributed, AC tλ is the compensation
amount under alternative compensation plans.
It is rational to assume that employees consider their average outcome over a reasonable period of time.
Therefore, the average of the expected incremental amount over a period of time is more appropriate.
The average is calculated as the following:

AVGjγ = ∑ t=1γ EtICtj/γ

where Sj is the sum of the expected incremental amount over period γ.
Therefore, the third proposition is articulated as the following:
Proposition (3): The higher level of expected positive incremental outcome (AVGjγ) under a profit
sharing plan results in high probability of employees’ positive reaction to the plan.
6
Proposition four: Industry payment comparability
The industry average payment may affect the valance of the compensation under a profit sharing
plan . If the firm’s average payment is below the industry average but the profit sharing plan covers the
difference and provides employees with an excess amount, the levels of attraction of the two portions
(below and above industry average) would be different. The portion below the industry average could
be considered as a wage correction which could take place in different ways. For this reason, the
payment under profit sharing should be decomposed into two components: the component over the
industry-average-wage payment, and the component below the industry-average-wage payment. The
valence of the component above the industry level may be higher because it can be considered as the
amount which is attributed to the profit sharing plan. Therefore, the effects of these two portions are
considered separately. These two components are defined as C1 and C2 and analyzed as follows:
C1 = PSHP - IWA

C2 = IWA - FWA
where:
IWA is industry wage average, and FWA is the firm’s wage average.
In the case of C2> 0 and C1>0 (which means the firm’s average payment without profit
sharing is less than the industry average), it is expected that C1 and C2 to have different valance.
According to this discussion, the fourth proposition is formed as the following:
Proposition (4): The employees’ positive reaction to a profit sharing plan is associated positively with
the level of C1 (incremental amount under the plan over the industry average payment).
The discussed propositions illustrate how accounting information could be used to explain the
employees’ behavior about the adoption or rejection of a profit sharing plan. As factors other than the
financial indicators may affect the employees’ perception, our test should control for the effects of these
factors. The main factors which are controlled in this study are as follows.

Control for other related factors

1. Firm size: The size of the firm may affect the perception about the firm’s earning power and going
concern assumption. It is expected that firm size is positively related to the employees’ positive reaction
to a profit sharing plan.
2. Industry membership: Employment relationship and the payment system could be different cross
industries. Accordingly, the employees’ perception about different types of compensation plans
could be different cross industries.
3. The length of employment: As profit sharing is more a long term oriented compensation plan, its
attraction may be sensitive to the average length of employment in the firm. For firms at where the
employment turnover is lower, employees may value profit sharing plans more. Therefore, the
employees’ reaction to profit sharing plan could be positively related to the length of employment.

7
4. Type of employment relationship: Different types of employment (as the indicator of the type of the
relationship with the firm) may affect the attractiveness of the different types of the compensation.
Employees who are working based on the temporary types of employment may not react to a profit
sharing plan in the same way that more tenure-based employees do because the temporary-based
employees may have lower belonging feeling to the firm. Therefore, the percentage of tenure
employees to non-tenures is expected to be positively related to the employees’ reaction to a profit
sharing plan.
The rest of this paper provides an empirical approach to test the explanatory power of the indicators.
IV. Estimating the Probability of the Employees’ Reaction
A Logit-based model is used to investigate empirically the significant of the discussed factors on
the employees’ reaction and predicts the probability of employees’ positive reaction to a profit sharing
plan.
The proxy for employees’ positive reaction to the plan is defined as the adoption or renewal of
the plan. This proxy is used because the union and employees’ representative usually examine the
employees benefit under the plan before the adoption. Therefore, it is reasonable to assume that the
adoption or renewal of the plan is a proxy for employees’ positive reaction to the plan. Also, the model
is used to estimate the probability of the adoption or renewal. To develop the model, two extreme cases
are considered: the highest probability of positive reaction (100%), when the plan is adopted , and the
lowest probability of the positive reaction (0%), when the plan is rejected. Any number in between is
indicator of the probability of employees positive reaction to the plan. The probability of negative
reaction is defined as one minus the probability of positive reaction. The prediction model is defined as
the following:

Ps = 1 / (1 + e(-yi))
where: Ps is the probability of the employees’ positive reaction which varies from zero to one.
Accordingly, the probability of negative reaction is defined as PF = 1 - PS ,
Yi = f(β Xi)
where Yi is a linear index of positive reaction to the plan, Xi is the vector of independent variables (the
discussed financial indicators and control variables), β are the coefficients of Xi and measure the
impacts of Xi, variables on the probability.
The probability PS and the index Yi are positively related. It means the larger index values show the
higher probability of positive reaction. As it was discussed, Ps varies from zero to one indicating the
probability of zero to 100 percent. Also the model tests the effect of each variable on the employees’
positive reaction.

V. The importance of the financial indicators in the model

One of the objectives of the paper is to identify the financial indicators and the control variables
which are the most effective on the probability of the positive reaction by employees. In the case of
regular regression, the coefficient analysis may be a proper way to identify the importance of each
variable. However, contrary to the standard regression model, the importance of each variable in a
8
Logit model is not straightforward because of the unit measurement problems. In fact, the coefficients in
a Logit model are the odds of an event occurring; defined as the ratio of probability of happening an
event to the alternative probability:

Log{ prob.(event)/prob.(no event)}=α +β XI

To interpret the coefficients in the Logit model and analyze the importance of each explanatory variable,
an elasticity type measure is used following Theodossiou, 1996:

Ej=|∂logH(W--δ)/∂(Wj/σj)|=(1-H(δ --))|δ j|σj

where W-- is the overall sample mean of an attribute vector W, and Wj and σj are the overall mean and
standard deviation of wj from the overall mean. For the level of employees’ perception about profit
sharing plan, H(W--δ) = f(X--β), W-- = X--, and δ=β
The elasticity Ej measures the percentage change in independent variable per unit change in the
standardized variable wj / σj. Higher values for this measure indicate higher relative importance for the
variable w. In this approach, the measurement of the importance of explanatory variables is independent
of the measurement units for the variables.
Selection of the variables which add significant value to the model
The elasticity measure (Ej) discussed in the previous section ranks independent variables based
on their effect in the model. However, it is desirable to select a set of independent variables which add
significant value to the model. To select this set, Akaike’s Information Criterion (AIC) is used. This
criterion incorporates in the model the best approximation of reality (Judge et al. 1985) and select the
variables which really add explanatory power to the model based on the maximum likelihood function.
The AIC is calculated as the following:
AIC= (2/N)(L(θ)-(K))
where N is the sample size, K is the number of explanatory variables in the model, and L(θ) is the
sample log likelihood function.
The set of variables which minimize the AIC are the best explanatory variables in the model.
Another technique to select the best set of explanatory variable is Schwarz Criterion. This criterion is
more conservative than AIC and usually leads to the selection of fewer variables. Either of these
techniques shows which set of financial indicators and control factors have significant effects on the
employees’ positive reaction.
VI. Conclusion
This paper discusses the implication of accounting information in estimating the employees’
positive reaction to profit sharing plans. Expectancy theory is used to illustrate factors which are
effective on the employees’ perception about the plan. In particular, the effects of four financial
9
indicators are discussed: risky environment, risky outcome, expected outcome, and industry payment
compatibility.
The paper discusses a Logit-based model to predict the probability of the employees’ positive
reaction to a profit sharing plan. The model also tests the significance of the proposed financial factors
and control variables. As the interpretation of the coefficients in a Logit model is not straightforward, an
elasticity measurement is discussed to evaluate the importance of each variable in the model. AIC
criterion is discussed to select the set of the variables (financial indicators and control variables) which
are the most effective factors in the model.
The model has several important implications including: (i) the model tests the implication of
accounting information in explaining the employees’ behavior in a management-labor context. (ii) the
model illustrates which factors are more effective on the employees’ positive reaction, allowing
management to improve the situation accordingly. (iii) Unions and employees’ representatives are able
to investigate the effects of the factors effective on the employees’ outcome.

References

Bell, L. and D. Neumark. 1993. Lump sum payments and profit-sharing plans in the union sector of the
United States economy. Economic Journal 103: 602-19.

Bhargava, S. 1994. Profit sharing and the financial performance of companies: evidence from U.K. The
Economic Journal 104: 1044-1056.

Booth, P. 1990. Strategic Rewards Management, Ottawa, Ontario. The Conference Board.

Biagioli, M. 1993. An econometric investigation of employee financial participation in enterprise results in a

sample of large Italian firms. Unpublished paper, University of Modena, Italy.

Blanchflower, D. 1991. The economic effects of profit sharing in Great Britain. International Journal of
Manpower 12: 3-9.

Blasi, J., M. Conte, and D. Kruse. 1996. Employee stock ownership and corporate performance among
public companies. Industrial and Labor Relations Review 50: 60-80.

Blasi, J. and Kruse, D. 1991. Owners. New York: Harper Collins.

Bougen, P. D., S. D. Ogden, and Q. Outram. 1990. The appearance and disappearance of accounting:
wage determination in the U.K.: The New coal industry. Accounting, Organizations, and Society
15:149-171.
Bougen, P. D. 1989. The emergence, roles and consequences of an accounting-industrial relations
interaction. Accounting, Organizations, and Society 14: 203-235.

10
Bougen, P. D. 1985. A radical perspectives on the disclosure of accounting information on trade unions.
Accounting, Organizations, and Society 10: 211-225.

Bradley, M. D. and S. C. Smith. 1992. The comparative institutions of profit sharing: the US computer
industry. Journal of Economic Issues 26: 573-82.

Bushman, R. and R. J. lndjcjikian. 1993. Accounting income, stock price, and managerial compensation.
Journal of Accounting and Economics 16, 3-23.
Cable, J. R. and Wilson, N. 1990. Profit sharing and productivity: some further evidence. The Economic
Journal 100: 550-556.

Cahuc, P. and B. Dormont. 1992. Profit sharing: does it increase productivity and employment? A
theoretical model and empirical evidence on French micro data. Working Paper. University of Paris.

Calvo, G. A. 1987. The economics of supervision in incentives, cooperation, and risk-sharing (Ed.: H.R.
Nalbantian), Totowa, New Jersey: Rowman and Littlefield: 87-106.
Capelli, R and P. D. Sherer. 1990. Assessing worker attitudes under a two-tier wage plan. Industrial and
Labor Relations Review 43: 225-244.

Carstensen,V., K. Gerlach, and O. Hubler. 1992. Profit sharing in German firms: institutional framework,
participation, and microeconomic effects. Paper prepared at Hannover University for the WZB Workshop,
Institutional Frameworks and Labor Market Performance, Berlin.

Chaykowski, R. and B. Lewis. 1995. Compensation Practices and Outcomes in Canada and the United
States, Kingston, Ontario: IRC Press-Queens University.
Cheadle, A. 1989. Explaining patterns of profit sharing activity. Industrial Relations 28: 387-400. Estrin,
S. and N. Wilson. 1989. Profit sharing, the marginal/cost of labour and employment variability. Draft
Department of Economics, London School of Economics.
Conte, M. A. and J. Svejnar. 1988. Productivity effects of worker participation in management: profit -
sharing. International Journal of Industrial Organization 6:139-151.
Defourney, J. Estrin, S. and D.C. Jones. 1985. The Effects of Workers Participation on Enterprise
Performance. International Journal of Industrial Organization 3: 197-217.
Estrin, S., P. Grout, and S. Wadhwani. 1987 Profit Sharing and Employee Ownership. Economic Policy 2:
13-52.
Fitzroy, F. and K. Kraft. 1987. Cooperation, productivity, and profit sharing. Quarterly Journal of
Economics, 102: 23-35.

Florkowski, G. W. and K. Shastri. 1992. Stock price response to profit sharing in unionized settings.

11
Journal of Labor Research 13: 407-20.
Freeman, R. B. and M. M. Kleiner. 1990. The impact of new unionization on wages and working
conditions. Journal of Labor Economics 8: 8-25.
Gregg, P. A. and S. J. Machin, S. J. 1988. Unions and the incidence of performance linked pay schemes
in Britain. International Journal of Industrial Organization 6: 91-107.
Hanson, C. G. and W. D. Bell. 1987. Profit Sharing and Profitability: How Profit Sharing Promotes
Business Success. Institute of Personnel Management, London: Kogan Page Ltd.
Hart, R. A. and O. Hubler. 1990. Wage, labour mobility, and working time effects of profit-sharing.
Empirica 17: 115-30.
Holthausen. R. and D. Larcker. 1991. Financial performance and organizational structure, Working paper,
University of Pennsylvania. Philadelphia, PA.

Jehring, J.J. and B. L. Metzger. 1960. The Stockholder and Employee Profit Sharing. Evanston, Illinois:
Profit Sharing Foundation.
Jones, D.C. and J. Svejnar. 1985. Participation, profit sharing, worker ownership and efficiency in Italian
producer cooperatives, Economica 52: 449-465.
Judge, G.G., W. E. Griffiths, R. Carter Hill, H. Lutkepohl and T-G. Lee. 1985. The theory and Practice of
Econometrics, New York, John Wiley and Sons.

Knights, D, and D. Collinson. 1987. Disciplining the shopfloor: A comparison of the disciplinary effects of
managerial psychology and financial accounting. Accounting, Organizations, and Society 15: 457-478.

Kraft, K. 1991. The incentives effects of dissimilarities, efficiency wages, piece-rates and profitsharing.
The Review of Economics and Statistics 73: 451-460.
Kruse, D. L. 1992. Profit sharing and productivity: microeconomic evidence from the United States. The
Economic Journal 102: 24-36.
Kruse, D. L. 1996. Whey do firms adopt profit sharing and employee ownership plans? British Journal of
Industrial Relations 34: 515-539.

Lambert, R., D. Larcker, and K. Weigelt. 1993. The structure of organizational incentives. Administrative
Science Quarterly 38, 438-461.

Lambert, R. and D. Larcker. 1987. An analysis of the use of accounting and market measures of
performance in executive compensation contracts; Discussion. Journal or Accounting Research 25:
85-130.

Locke, E. A. 1968. Toward a theory of task motivation and incentives. Organizational Behavior and

12
Human Performance 3: 157-189.
Long, R. 1992. The incidence and nature of employee profit sharing and share ownership in Canada.
Industrial Relations 47: 563-487.
Magnan, M., S. St-Onge, and M. Lalande. 1997. The impact of profit sharing plans on firms performance:
an empirical investigation, ASAC, Conference proceedings.
Metzger, B. L. 1978. Profit Sharing in 38 Large Companies: Piece of the Action for l,000,000 Participants.
Evanston, Illinois: Profit Sharing Research Foundation.
Metzger, B.L. and J. A. Colletti. 1971. Does Profit Sharing Pay? Evanston, Illinois: Profit Sharing
Research Foundation.
Oakes and Covaleski. 1994. Historical examination of the use of accounting-based incentive plans in the
structuring of Labor-management relations. Accounting, Organizations, and Society 19: 579-600.

Owen, D. and A. J. Lioyd. 1985. The use of financial information by trade union negotiators in plant level
collective bargaining. Accounting, Organizations, and Society 10: 329-351.

Paul, J.P. 1992. On the efficiency of stock based compensation. Review of Financial Studies 5: 471 502.

Sloan, R. G. 1993. Accounting earnings and top executive compensation. Journal or Accounting and
Economics 16: 55-100.

Perry, N. J. 1988. Here come richer, riskier, pay plans. Fortune. December.

Sinkey, J. F. 1992. Commercial Bank Financial Management, 4 Ed. New York: Macmillan.
Skinner, B. F. 1969. Contingencies of reinforcement: A Theoretical Analysis. New York:
Appleton-CenturyCrofts.

St-Onge, S. A. 1992. Field Investigation of Variables Influencing Pay-for-Performance Perception.

Unpublished Ph.D. thesis, York University.

Stiglitz, J. E. 1987. The Design of Labor Contracts: The Economics of Incentives and Risk Sharing in
Incentives, Cooperation and Risk-Sharing (Ed.: H.R. Nalbantian). Totowa, New Jersey: Rowman and
Littlefield: 47-68.
Theodossiou, P., E. Kahya, R. Saidi, and G. Philippatos. 1996. Financial distress and corporate
acquisitions: further empirical evidence. Journal of Finance and Accounting 23: 699-720.

Tyson, D. E. 1996. Profit sharing in Canada, John Wiley and Sons Canada Limited.

Vroom, V. H. 1964. Work and Motivation. New York: Wiley.

13
Wadhawani, S. and M. Wall. 1990. The eEffects of profit-sharing on eployment, wges, sock rturns and
poductivity: evidence from U.K. Micro-Data. The Economic Journal March: 100: 1-18.

Weitzman, M. L. 1984. The Share economy. Cambridge: Harvard University Press.

14