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Lack of diversification among employee stock owners : an empirical evaluation of behavioral explanations.

Pendleton, A. and Robinson, A. (2018) 'Lack of diversification among employee stock owners : an empirical evaluation of behavioral explanations.', Human resource management., 57 (7). pp. 1175-1187.


The article considers the reasons for employees holding large proportions of their financial savings and investments in company stock, drawing on explanations proposed in the behavioral finance literature. Utilizing data from a survey of employees participating in the United Kingdom Save as You Earn stock options and savings scheme, it is found that substantial proportions of stock owners hold sizeable concentrations of employer stock. Several explanations for this risky behavior are tested, with familiarity, reciprocity, and inertia found to be associated with portfolio concentration. Organizational commitment and “naïve extrapolation” from recent stock prices are not. The implications for theory and practice are considered.

Item Type:Article
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Publisher statement:This is the accepted version of the following article: Pendleton, A. & Robinson, A. (2018). Lack of Diversification Among Employee Stock Owners: An Empirical Evaluation of Behavioral Explanations. Human Resource Management 57(5): 1175-1187, which has been published in final form at This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.
Date accepted:07 November 2017
Date deposited:09 November 2017
Date of first online publication:09 January 2018
Date first made open access:09 January 2020

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