WHY EMPLOYEE-OWNED COMPANIES ARE BEATING ASX200 SHARE PRICES
Written on the 15 February 2017 by Business News Australia
EMPLOYEE-owned companies command a higher share price than their publicly listed peers, reaping a 17 per cent premium over the ASX200, a new index has found.
The Employee Ownership Australian Index (EOAI) reveals that companies which are at least 30 per cent owned by employees tend to have better environmental, social and governance standards, in turn attracting higher share prices than their listed counterparts.
In the past five and a half years, the average share price of EOAI companies increased by 40 per cent, as opposed to the average share price of the ASX200 which only increased 23 per cent.
EOAI companies were also twice as likely to have clear evidence of equal opportunity schemes in the workplace.
Angela Perry, chair of Employee Ownership of Australia and New Zealand, says shareholders should be paying more attention to companies that promote ownership by employees.
"Employee ownership delivers numerous advantages to companies and this research shows clear productivity improvements," says Perry.
"Investors also benefit from employee owners that are more focused on gender and diversity, training, job security and sustainability."
Perry also explains that employee-owned companies are more likely to build a robust culture of environmental, social and governance (ESG) standards.
Independent research conducted by corporate analyst CAER has also supported the claim that EOAI companies maintain these higher standards.
CEO of CAERK Julia Leske believes fund managers who are looking to incorporate ESG into their investment considerations should be paying the most attention to EOAI companies.
"Responsible investors should be looking for companies with high levels of employee ownership because their broader social sustainability performance is better," says Leske.
Author: Business News Australia