Employee stock ownership and diversification

• Published in: Annals of operations research Vol. 176; no. 1; pp. 95 - 107
• Main Authors: Markowitz, Harry M., Blasi, Joseph R., Kruse, Douglas L.
• Format: Journal Article
• Language: English
• Published: Boston Springer US 01.04.2010; Springer
• Subjects: Business and Management; Combinatorics; Investment analysis; Operations Research/Decision Theory; Stocks; Theory of Computation; Company Stock; Sharpe Ratio; Portfolio Selection; Capital Asset Price Model; Home Equity

A small to moderate size investment in company stock results in a relatively small increase in the riskiness of an employee’s portfolio, even if the company’s volatility is substantially greater than that of a diversified portfolio which we assume the employee would hold otherwise. Thus the employee...