Who invests too much in employer stock, and why do they do it? Some evidence from uk stock ownership plans

Using data from a survey of employee stock-owners in seven UK companies, the author examines the determinants of excessive ownership of company stock in savings portfolios. The paper draws on the insights from the recent 401 (k) literature and examines the role of attitudes as well as demographic characteristics. By using a survey of employees it is possible to investigate the role of these factors more precisely than in much of the 401 (k) literature. The results indicate that loyalty and familiarity are important determinants of concentration in employer stock. Income is important too: the results imply that as savings rise with income, familiarity especially leads employees to channel much of this into employer stock.