Key Studies on Employee Ownership and Corporate Performance

Topic	Performance Measure	Study Period	Performance Impact	Source
Measuring the Impact of Ownership Structure on Resiliency in Crisis	Retirement account balances in ESOP companies versus comparable companies with 401(k) plans based on analysis of over 300,000 company for 5500 filings	2019-2020	Mean account balances in all S corporation ESOP companies was $67,000 higher than 401(k) balances in comparable companies, or roughly double the 401(k) amount. 94% of funds in ESOP accounts were from the employer, compared to just 31% in 401(k) plans. Most ESOPs also have a 401(k) plan, and these plans have assets similar to those in non-ESOP companies' 401(k) plans. Mean contribution from company to the ESOP was 2.6 times that of the mean contribution to 401(k) plans in comparable non-ESOP companies.	Nancy Wiefek and Nate Nicholson, “Measuring the Impact of Ownership Structure on Resiliency in Crisis,” study performed for Employee-Owned S Corporations of America, 2021
ESOPs, Private Companies	Annual growth post-ESOP relative to pre-ESOP, indexed for comparable company data	1988-1997	Sales growth: +2.4% Employment growth: +2.3% Productivity growth: +2.3%	Joseph Blasi, Douglas Kruse, and Dan Weltmann, "Firm Survival and Performance in Privately-Held ESOP Companies," Sharing Ownership, Profits, and Decision-Making in the 21st Century (Advances in the Economic Analysis of Participatory & Labor-Managed Firms, Volume 14), 2013, pp.109-124.
	Annual growth post-ESOP relative to pre-ESOP, indexed for comparable company data	1982-1986	Sales growth: +3.8% Employment growth: +3.4%	Michael Quarrey and Corey Rosen (both of the National Center for Employee Ownership), Harvard Business Review, Sept/Oct 1987
ESOPs, Public Companies	Tobin's Q (the ratio of the company's stock value to its book equity value)	1980-2004	ESOPs led to an 8.12% increase in Tobin's Q relative to the industry median.	"Employee Capitalism or Corporate Socialism? Broad-Based Employee Stock Ownership," E. Han Kim of the University of Michigan and Page Ouimet of the University of North Carolina, paper for American Finance Association 2010 Annual Conference
	Return on assets, profits, return on equity, and sales growth	1998-2004	Compared to comparable companies: Return on assets: +5.5% Net profit margin: +10.3% Return on equity: +5.6% Sales growth rate: -0.8%	Robert Stretcher, Steve Henry, and Joseph Kavanaugh, "The ESOP Performance Puzzle in Public Companies," Journal of Employee Ownership Law and Finance, Fall 2006
	Tobin's Q, long-term investment, operating risk, productivity, and growth	1995-2001	Compared to all non-ESOP companies: Median Tobin's Q: -9.0% Median annual sales growth: -3.0% Total factor productivity: -4.7%	Faleye,Olubunmi, Vikas Mehrotra, and Randall Morck, "When Labor Has a Voice in Corporate Governance," National Bureau of Economic Research Working Paper, No. 11254, 2005
Employee Ownership and Millennial Financial Health	Millennials saying they are in employee stock ownership plans report substantially higher income, wealth, and access to benefits than those not in plans	2017	33% higher median wages 92% higher net household worth 2.6 times more likely to receive tuition benefits Workers of color, low income workers, and single parents all also have substantially better outcomes	Nancy Wiefek, National Center for Employee Ownership, Employee Ownership and Economic Well Being, 2017
Public Companies with ESOPs Lay People Off Less in Recessions	Public companies with ESOPs provided much more job stability in previous two recessions	2017	Companies with no employee ownership plans cut jobs by 3% for each 1% increase in the unemployment rate; companies with ESOPs by just 1.7%. Companies with ESOPs are 75% as likely to go out of business	Fidan Kurtulus and Douglas Kruse, How Did Employee Ownership Firms Weather the Last Two Recessions? Employee Ownership, Employment Stability, and Firm Survival:1999-2011, Upjohn Institute, 2017
ESOPs and Employee Compensation	Salaries and retirement benefits compared to comparable employees in comparable companies using all ESOP companies in Washington State and a sample of comparable non-ESOP companies	1997	Wages 5% to 12% higher Total retirement assets 2.6 times greater Diversified retirement assets roughly comparable	Peter Kardas and Jim Keogh of the Washington Department of Community, Trade, and Economic Development, and Adria Scharf of the University of Washington, "Wealth and Income Consequences of Employee Ownership," National Center for Employee Ownership, 1998
	Public companies with ESOPs compared to comparable non-ESOP companies	1980-2004	Effect on employee compensation in ESOP companies owning: Less than 5%: + 0.8% More than 5%: + 5.2%	"Employee Capitalism or Corporate Socialism? Broad-Based Employee Stock Ownership," E. Han Kim of the University of Michigan and Page Ouimet of the University of North Carolina, paper for American Finance Association 2010 Annual Conference
	Participation in other retirement plans for ESOP participants; value of company-contributed assets to retirement plans in ESOPs versus non-ESOP companies.	2004-2007	ESOP participants are at least as likely to participate in a second retirement plans as comparable non-ESOP participants are likely to be in any retirement plan. Company contributed assets to retirement plans in ESOP companies are 2.2 times greater than company-contributed assets to retirement plans in non-ESOP companies.	Loren Rodgers, National Center for Employee Ownership, analysis of Form 5500 filings for all ESOPs and data from the Employee Benefit Research Institute (2010)
	Public companies with ESOPs have 4% greater overall compensation.	1991-2011	ESOPs in public companies had 4% greater overall compensation than public companies without ESOPs.	Fidan Kurtulus and Douglas Kruse, "How Did Employee Ownership Firms Weather the Last Two Recessions? Employee Ownership, Employment Stability, and Firm Survival:1999-2011," Upjohn Institute, 2017
Employee Ownership and Layoffs	2002, 2006, 2010, and 2014 General Social Survey.	2002-2014	Working adults who reported being in employee ownership plans were one-third to one-fourth as likely to report having been laid off in the prior year as those not in these plans.	Data compiled by Joseph Blasi and Douglas Kruse, Rutgers University.
Stock Options and Corporate Performance	Performance of public companies with broad-based stock option plans (more than 50% of full-time employees receive grants) compared with comparable companies without plans.	1997-2002	Companies with broad-based plans saw productivity rise 20% to 33% above comparable firms after plans were implemented, with medium-sized firms at the higher end of the scale.	James Sesil and Maya Kroumova, "Broad-Based Stock Options Before and After the Market Meltdown," Rutgers Working Papers, 2002.
	Before-and-after performance of public companies with broad-based option plans (same definition as above). Companies in three-year post-plan period compared to before and after data for comparable companies without plans.	1985-1987 and 1995-1997	Productivity: +14.8% Return on assets: +2.5%	Joseph Blasi, Douglas Kruse, Maya Kroumova, and James Sesil, Broadly Granted Stock Options Improve Corporate Performance
	Industry-adjusted return on assets in the 44% of S&P Super 1500 companies that had option plans where more than half the value of the awards went to the bottom 90% of the work force.	1997-2004	"A move from the 25th percentile of per-employee delta [that is, increased option grants per employee] to the 75th percentile of per employee delta implies an increase of 0.17% in ROA and a 0.15% increase in cost-adjusted ROA. Since the average per employee delta in our sample is about $760, a $1000 increase represents a little over a doubling of pay to performance sensitivity." Only companies with fewer than the median number of employees saw improvement, however, and in companies with narrowly focused awards actually, options had a negative impact on performance.	Yael Hochberg and Laura Anne Lindsey, "Incentives, Targeting and Firm Performance: An Analysis of Non-Executive Stock Options," Review of Financial Studies vol. 23, no. 11 (November 2010)

Note: To be included, studies must look at employee ownership companies compared to similar non-employee ownership or all non-employee ownership companies. Company performance studies must compare pre-ESOP to post-ESOP performance relative to the competition. The studies selected represent the most recent studies that have the largest and most representative samples. There has been no attempt to include only positive studies.

Sources for Future Research

If you want to do further research in the area of employee ownership, the NCEO maintains a variety of useful data sources. For more details, contact Research Director, Nancy Wiefek.