Research: Lack of diversification among employee stock owners: An empirical evaluation of behavioural explanations


Employee share ownership is widely viewed as good HR practice. But can they be too much of a good thing? This paper, by Andrew Pendleton of Durham University Business School and Andrew Robinson of Leeds University Business School, tackles the question of why some employees hold large amounts of shares in their employer.

The research uses data collected from a survey of participants in the UK Save As You Earn share plan conducted in 2015 in collaboration with YBS Share Plans, part of Yorkshire Building Society.

Key findings:

  • 22 per cent hold 50 per cent or more of their savings (by value) in company shares.
  • 10 per cent hold 75 per cent or more of their savings in company shares. The average value of these holdings was just over £18,000. 
  • 19 per cent of these groups are not members of their company pension scheme, and 14–15 per cent had no pension provision at all at the time of the survey.
  • Overall, the study shows the importance of sentiment and inaction rather than rational investment calculation.

Please note that this article was originally published in the US academic journal Human Resource Management. Access to the full article starts from $6.

Please email Andrew Pendleton, Professor of Human Resource Management at Durham University Business School, if you have any questions.