Capital Markets and the Future of Employee Ownership: an Analysis and a Point of View

The primary impediment to the further growth and realization of the broad-based employee ownership through the use of Employee Stock Ownership Plans (ESOPs) in the United States has been the lack of access to equity capital by companies sponsoring ESOPs. The lack of access to equity capital stands apart from the important work of the ESOP research community which is centered around topics such as how ESOPs improve firm performance, attend to issues of worker voice and share wealth with employees. What the ESOP research community has yet to sufficiently appreciate is the extent to which barriers to growth also have to do with how difficult it is for ESOP sponsors to interact with capital markets. A capital markets approach to the issue of ESOP growth asks how ESOPs can grow in a sustainable, long-term fashion.