We recently discussed an article by an influential tax journal that proposes the repeal of ESOPs. The Employee Ownership Blog shared Yes, ESOPs Really Are Good Retirement Policy, a letter to the editor in response to the article:

In their recent article in Tax Notes "Repeal Tax Incentives for ESOPs," Andrew Stumpff and Norman Stein argue that ESOPs do not improve employee wealth or corporate performance, encourage excessively undiversified retirement assets, and should be eliminated. They base this on an incomplete and highly selective look at the data. In fact, researchers "outside the ESOP community" (to use their words) have concluded quite the opposite… In short, before attacking ESOPs as a failed retirement policy, it would be wise to become a good deal more deducted about the topic than the professors did. There is a vast body of research on this topic; they looked at a very small sample and came to some very wrong conclusions.

The majority of the letter effectively counters the myths cited in the original article with facts and research that demonstrates the many ESOP benefits.

We recently started a discussion on the Benefits of ESOPs, including how ESOPs Increase Employee Wealth and Wages and Provide Greater Employment Stability and Increase Job Satisfaction. We will revisit some of the cited research in our future discussions.