Corporate Purpose and Firm Ownership

70 Pages Posted: 23 Aug 2019 Last revised: 23 Oct 2019

Date Written: August 20, 2019


Analyzing data from approximately 1.5 million employees across 1,100 established public and private US companies, we find that the strength of employee beliefs about their firm’s purpose is lower in public companies. This difference is most pronounced within the salaried middle and hourly ranks, rather than senior executives. Among public companies, purpose becomes progressively lower with more concentrated shareholders, especially among firms with high hedge fund ownership. These patterns can be partly explained by differences in CEO backgrounds and compensation: public firms, particularly those with strong shareholders, choose outsider CEOs at higher rates and pay them more relative to their employees. Our analyses suggest that these results are not driven solely by sorting effects, but appear attributable in part to the impact that firm owners have on their employees. In summary, shareholders appear to influence the strength of corporate purpose deep within organizations via the leadership and corporate practices they enable at the top.

Keywords: Corporate Purpose, Ownership, Leadership, Executive Compensation

Suggested Citation

Gartenberg, Claudine Madras and Serafeim, George, Corporate Purpose and Firm Ownership (August 20, 2019). Available at SSRN: or

Claudine Madras Gartenberg (Contact Author)

Wharton ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States
2158987755 (Phone)

George Serafeim

Harvard University - Harvard Business School ( email )

381 Morgan Hall
Boston, MA 02163
United States


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