Financial returns of public ESOP companies: Investor effects vs. manager effects

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

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


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.

Original languageAmerican English
Pages (from-to)51-61
Number of pages11
JournalFinancial Analysts Journal
Issue number4
StatePublished - 1996

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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