ESOPS IN PUBLICLY HELD COMPANIES: EVIDENCE ON PRODUCTIVITY AND FIRM PERFORMANCE

Abstract

Eighty-five publicly traded firms that establish an employee stock ownership plan between 1973 and 1986 are examined to determine the effect of ESOP adoption on their productivity and performance. We analyze several measures of productivity and performance and compare the sample firms with a control group matched by industry and size. The results provide no evidence of any productivity gains or performance improvements following ESOP adoption. The proposition that employees with an equity stake will be more productive and improve firm performance is not supported.