March 5, 1996

New Study by University Researchers Says IPOs by Employee-Friendly Companies Perform Better

NCEO founder and senior staff member

A new study by Theresa Welbourne at Cornell and Alice Owens at Vanderbilt shows that initial public offerings by companies that offer stock and profit sharing to employees, provide worker training, and stress good work relations do much better than companies not practicing these "employee-friendly" approaches.

Five years after their IPOs, 60% of the companies were still in business as independent entities, but 87% of these with profit sharing and stock ownership were, while only 45% of those without these practices survived. Despite their better performance, the employee-friendly firms had market-to-book ratios lower than their stingier counterparts, indicating that Wall Street types are still skeptical that any of this makes much sense.