Sustainability of employee ownership: the role of capital structure in ESOP plan terminations

Tej Gonza links US ESOP plan terminations to capital-structure rules. From 2016 to 2021, about 250 new private ESOP firms formed each year while about 281 plans ended each year, a net loss of 181 firms. Bankruptcies run near 0.2 percent a year, so sales and repurchase pressure explain more of the decline. A rollover, value-based individual capital accounts, and a collective capital account would tie buybacks to cash flow and keep new workers in the ownership.