Financial Returns of Public ESOP Companies: Investor Effects vs. Manager Effects

Michael A. Conte, Joseph Blasi, Douglas Kruse and Rama Jampani

Financial Analysts Journal, 1996, vol. 52, issue 4, 51-61

Abstract: The financial returns of public companies that sponsor ESOPs are substantially and significantly higher than those of comparable non-ESOP companies. The returns are systematically different even after adjusting for risk, providing evidence of a positive investor effect. The analysis of pre- and postadoption returns of ESOP-sponsoring companies suggests that the adoption of an ESOP actually reduces financial returns, signifying the presence of a relatively large negative manager effect. These findings are consistent with the idea that most ESOPs in large publicly traded companies are adopted for defensive purposes. Even though ESOP adoption lowers financial returns in large companies and has no significant effect in smaller companies, the presence of an ESOP remains a good signal to buy the sponsor's stock.

Date: 1996
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.2469/faj.v52.n4.2011 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ufajxx:v:52:y:1996:i:4:p:51-61

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ufaj20

DOI: 10.2469/faj.v52.n4.2011

Access Statistics for this article

Financial Analysts Journal is currently edited by Maryann Dupes

More articles in Financial Analysts Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().