The State of Broad-Based Employee Ownership Plans 2012

Kruse and Blasi obtained files from Dun & Bradstreet on companies that had adopted ESOPs between 1988 and 1994. They matched these companies to non-ESOP companies that were comparable in size, industry, and region. Then they looked for which of these companies had sales and employment data available for a period three years before the plan's start and three years after. The sales and employment growth data were then compared for each year for each paired company. They also checked the companies' filings with the Department of Labor to determine which of the companies had other retirement-oriented benefit plans. Finally, they looked to see what percentage of the companies remained in business from 1995 through 1997.

The process yielded 343 ESOP companies and 343 pairs for the overall sample. However, missing data meant that employment data were available for only 254 ESOP companies and 234 pairs, sales data for 138 ESOP companies and 77 pairs, and sales/employee data for 115 ESOP companies and 65 pairs (some non-ESOP companies could be paired with more than one ESOP company).

The results showed that ESOP companies perform better in the post-ESOP period than their pre-ESOP performance would have predicted. Table 5 shows the difference in the pre-ESOP to post-ESOP period for ESOP companies' sales growth, employment growth, and growth in sales per employee.

It might be assumed that sales per employee would not go up by a full 2.3% per year since the sales and employment growth increases were about the same, but, the researchers explain, the differing compositions of the samples for the measures makes such a simple comparison misleading. The relative growth numbers might seem small at first glance, but projected out over 10 years, an ESOP company with these differentials would be a third larger than its paired non-ESOP match.