Do Employee Share Owners Face Too Much Financial Risk?

A major theoretical objection against employee share ownership is that workers are exposed to excessive financial risk. Theory posits that 10 to 15% of a typical worker’s wealth portfolio can be prudently invested in employer stock. The authors analyze employee share ownership in US family portfolio...

Full description

Saved in:
Bibliographic Details
Published inIndustrial & labor relations review Vol. 75; no. 3; pp. 716 - 740
Main Authors Kruse, Douglas, Blasi, Joseph, Weltmann, Dan, Kang, Saehee, Kim, Jung Ook, Castellano, William
Format Journal Article
LanguageEnglish
Published Los Angeles, CA SAGE Publications 01.05.2022
SAGE PUBLICATIONS, INC
Subjects
Diversification
Employees
Families & family life
Owners
Ownership
Portfolios
Risk
Risk reduction
Tolerance
Wealth
benefits
pay incentives
risk compensation
performance pay
pay practices
Online AccessGet full text

Cover

More Information
Summary:A major theoretical objection against employee share ownership is that workers are exposed to excessive financial risk. Theory posits that 10 to 15% of a typical worker’s wealth portfolio can be prudently invested in employer stock. The authors analyze employee share ownership in US family portfolios using the 2004 to 2016 Survey of Consumer Finances. Overall, 15.3% of families with private-sector employees held employer stock in 2016, and one in six of these families exceeded the 15% threshold. Employee share ownership appears to generally add to, rather than substitute for, both pension and overall wealth. Employee share owners express higher risk tolerance and financial knowledge and greater understanding of the value of diversification. While financial risk does not appear to be a substantial problem for most employee share owners, a small minority may face excessive risk, and the authors suggest approaches to reduce such risk.
ISSN:0019-7939
2162-271X
DOI:10.1177/00197939211007394