Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/253334 
Year of Publication: 
2021
Citation: 
[Journal:] Global Business & Finance Review (GBFR) [ISSN:] 2384-1648 [Volume:] 26 [Issue:] 3 [Publisher:] People & Global Business Association (P&GBA) [Place:] Seoul [Year:] 2021 [Pages:] 88-99
Publisher: 
People & Global Business Association (P&GBA), Seoul
Abstract: 
Purpose: We examine whether employee ownership in DC plans are explained by either shared capitalism or managerial entrenchment motives. Design/methodology/approach: We calculate the average monthly risk-adjusted return (alpha) of each portfolio by sorting firms into six portfolio groups based on the percentage of employer stock in market value of equity. Findings: We find that the zero-investment strategy of buying a portfolio without employee ownership and selling a portfolio with the largest employee ownership earns 1.32% of alpha per month. Further, we provide evidence that portfolios with higher employee ownership experience greater distress risk. Research limitations/implications: These findings suggest that the capital market significantly overvalues firms with employee ownership in DC plans, supporting managerial entrenchment motives. Originality/value: To the extent that there has been no research to provide time series evidence on the relation between employee ownership and stock returns, this study's novelty is that it could explain the mixed results presented by previous literature.
Subjects: 
Defined contribution plan
Employee ownership
Shared capitalism
Managerial entrenchment
Alpha
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

Files in This Item:
File
Size
354.6 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.