Employee Stock Ownership Plans:
Little Evidence of Effects on Corporate Performance
PEMD-88-1, Oct 29, 1987
In response to a congressional request, GAO examined employee stock ownership plans (ESOP) to determine: (1) whether companies with ESOP experienced an improvement in corporate performance, either in terms of profitability or productivity; and (2) what ESOP-related factors, if any, were related to changes in performance.
GAO found that: (1) there were no consistent, significant patterns of improvement in corporate profitability and productivity in firms that adopted ESOP; (2) when non-managerial employees participated in corporate decisionmaking through work groups and committees, productivity improved; and (3) it could not determine whether such productivity improvement was due to the ESOP benefits or whether better-performing firms tended to give their employees more opportunity for participation. GAO concluded that ESOP have moved in the direction of meeting their legislative goals of broadening capital ownership and providing an alternative means to finance capital growth.