This study presents the first comprehensive compilation of the number of people around the world who own shares directly and indirectly. We document that at least at least 310 million people in 59 countries (24 developed and 35 emerging market nations) own stock directly [Table 1]. Nearly 173 million of these investors live in countries with developed stock markets and the remaining 137 million reside in countries with emerging stock markets. We also document that at least 503 million individuals in 64 countries own stock indirectly through pension fund holdings [Table 2]. Additionally, we describe the evolution of shareholdings in several key countries. We present preliminary regression analyses of the determinants of personal shareholdings, and plan to expand these tests dramatically over the next several months. Clearly direct shareholdings increase with national income and are higher in common law than civil law countries, but the presence of privatization programs has surprisingly little observable impact.

William L. Megginson
Price College of Business
307 West Brooks, 205A Adams Hall
The University of Oklahoma

This study presents the first comprehensive compilation of the number of people around the world who own shares directly and indirectly. We document that at least at least 310 million people in 59 countries (24 developed and 35 emerging market nations) own stock directly [Table 1]. Nearly 173 million of these investors live in countries with developed stock markets and the remaining 137 million reside in countries with emerging stock markets. We also document that at least 503 million individuals in 64 countries own stock indirectly through pension fund holdings [Table 2]. Additionally, we describe the evolution of shareholdings in several key countries. We present preliminary regression analyses of the determinants of personal shareholdings, and plan to expand these tests dramatically over the next several months. Clearly direct shareholdings increase with national income and are higher in common law than civil law countries, but the presence of privatization programs has surprisingly little observable impact.

JEL codes: G18, G32, P14
Keywords: Government policy and regulation; Capital and ownership structure; Property rights
March 18, 2009

The last quarter-century has seen dramatic growth in capital market size and activity across the world. For instance, between 1983 and the end of 2007, the capitalisation of the world stock markets grew by 1,800%, from $3.34 trillion to $62.6 trillion, while the volume of share trading increased almost 100-fold, from $1.22 trillion in 1983 to $111.2 trillion during 2007. Even after the worldwide decline in equity market values during 2008 and early 2009, stock market capitalization still nearly equals total world GDP, estimated by the World Bank at around $54 trillion. While the growth of the stock markets is well covered in the academic and popular press, the related growth of individual share ownership is much less well documented. Indeed, the massive growth of share ownership has been largely overlooked by academic and professional researchers, and this lack of attention applies both to direct share ownership (when investors hold shares of listed companies directly on their accounts or accounts of self-managed pension funds, and/or invest in mutual funds, or hedge funds), and to indirect share ownership (when investment in equity is done via pension funds and insurance companies). Indeed, our study presents the first truly comprehensive estimate of the number of individuals around the world who own shares either directly or indirectly.

We draw on a large number of official sources to document that at least at least 310 million people in 59 countries (24 developed and 35 emerging market nations) own stock directly. Nearly 173 million of these investors live in countries with developed stock markets and the remaining 137 million reside in countries with emerging stock markets. We also document that at least 503 million individuals in 64 countries own stock indirectly through pension fund holdings. Additionally, we argue that both of these estimates are biased downward—perhaps significantly—and that the total world of people worldwide whose wealth and income levels are directly exposed to stock market valuation changes probably exceeds one billion souls. Compiling this “census” of shareholders is of particular importance given the recent meltdown of financial markets, since our findings suggest that the wealth of a large fraction of the world’s population of six billion people has fallen sharply over the past eighteen months.

Besides documenting the growth of direct and indirect share ownership around the world, we also discuss possible causes of this dramatic increase, and contribute to the debate on its importance for the development of capital markets and economies. We are not currently able to answer all questions we raise in this paper, but will continue pursuing these answers in continuing research. The discussion of the growth of share-ownership includes both developed and emerging markets. Although the stock markets of the developed countries contribute nearly 73% to the world market capitalisation, it is the emerging markets that have experienced the most dramatic increase in the number of stock markets, growth of stock