Employee Stock Ownership and Corporate Performance among Public Companies

Abstract

This study compares the corporate performance in 1990/91 of two groups of public companies: those in which employees owned more than 5% of the company's stock, and all others. The results of the analysis, which looks at profitability, productivity, and compensation, are consistent with neither negative nor highly positive views of employee ownership, but where differences are found, they are favorable to companies with employee ownership, especially among companies of small size. The circumstances in which employee ownership was used—specifically, whether it was part of a wage/benefit concession package and whether it was involved in a takeover threat—do not appear to have had a significant effect on the 1990 performance levels or 1980–90 performance growth of the firms. Although the authors caution that the data do not permit clear tests of causality, these results are broadly consistent with those of past studies.

Ownership Structure and Enterprise Restructuring in Six Newly Independent States

“…The study finds mixed effects on performance -while worker-owners display higher job satisfaction and motivation, they are not more productive than workers who do not own equity in their companies. Blasi, Conte, and Kruse (1996) use corporate data for the United States to find that employee ownership is associated with improved firm performance only in small-size companies. We use the available evidence to argue that employees, like small shareholders, may be less able (and face little incentive) to monitor firm restructuring.…”

A Review of Employee Stock Option Plans: Panacea or Pandora’s Box for Firm Performance

“…Empirical evidence from Frye (2004) [21]suggested that companies with higher percentage of ESOs render greater performance. Blasi et al (1996) [3]established that firms adopting stock options in the same industry and of same size during 1990 exhibited similar levels of profitability, however significantly higher growth in return on assets, price/earnings ratio and profit margin was noted for adopters in comparison to the non-adopters during 1980 -1990. The study therefore, documented that small companies exhibited a positive relationship between employee stock option adoption and profitability growth but could not find any strong association between stock options and productivity.…”

Leximin

“…Employee stock ownership plans-"ESOPs"-are usually organized so as to minimize worker participation in management decisions. (Kelso & Hetter 1967, Kelso & Adler 1958, Blasi & Kruse 1991, Blasi, Conte and Kruse 1996 Thus, worker ownership based on these plans are not per se within the scope of this essay. Even so, "actual [worker cooperatives] are in fact quite heterogenous."…”