The determinants of investment in employee owned firms: evidence from France

In this paper we use a large panel data set to test competing hypotheses about investment in employee owned firms (EOFs), especially the view that EOFs will invest less. Most of the variables stressed by labour-management theorists as inhibiting investment are found not to play any role in practice, but the volume of investment is found to be positively associated with the share of investment funded externally. This highlights the crucial role of external finance in supporting investments in EOFs.