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Research Supports ESOP Companies

Leverage — A Powerful Tool.

Recent studies tell the tale. Public companies with ESOPs financially out-perform non-ESOP companies. *Respondents to other studies show that establishing an ESOP increased stock prices and that company officers witnessed a positive financial impact. Some statistics:

  • The average ROA for ESOPs was 2.7% higher than non-ESOPs.
  • More than 60% of ESOPs experienced stock price increases immediately following announcement of the program, reflecting market attitude.
  • 82% of respondents said the ESOP has a “positive to significantly positive” impact on business results.

We often refer to what researchers call the “ownership dynamic.” This concept relates to the power of “engaged ownership” that derives from connections – among people, information and action. Three factors strengthen and multiply these connections:

  • Shared investment—a common stake for all employees
  • Business information—accessible and understandable
  • Broad-based influence and decision-making—throughout the organization

This most conclusive research to date points to what the ESOP world has been saying for years. ESOPs, combined with employee communication, are powerful tools that can improve employee performance and morale, and in turn, improve the company’s bottom line.

J. Michael Keeling, President, The ESOP Association

* PCC’s ESOP experience dates to 1972, when only 7 were in existence. Now, over 10,500 are out there, and we are among the most proven, tested firms anywhere, designing, installing, financing, administering and following-up a very large number of these complicated transactions.

Dickson C. Buxton, Founder, PCC; Co-Founder, The ESOP Association