Purpose: This paper gives an overview over some theory and empirical evidence on employee ownership and other forms of employee financial participation and answers the following questions: What is employee ownership and what is the relation to other forms of financial participation? Why is employee ownership widespread in some developed market economies like US and in Italy, France and Spain, while it has a quite rare occurrence in the Scandinavian countries? What are the conditions favouring and what are the barriers for employee ownership? What are the advantages and drawbacks for employee owned companies? The paper also gives a summary of the experience in the Baltics – with reference to the following three country articles – and gives finally some perspectives for the future. Methodology/approach: This is a general review article on theory and some of the main empirical research results on employee financial participation. Findings: It is predicted that employee ownership will be found in organizations which are small, homogenous, labor intensive, and with high emphasis on human capital. Employee ownership can have positive effects on labour productivity, but financial constraints may make a barrier for investment and restructuring. Legislation with tax incentives, rules for selling and buying employee shares, access to loans change the balance in favor of employee financial participation. In the Baltic countries there was a wave of employee ownership following early privatization. However, these firms soon were taken over by managers and often later by outside owners. Profit sharing is rare and there is no legislation promoting employee participation in the management bodies of companies. Implications: Legislation following the trend in EU could promote a revival of employee financial participation and strengthen motivation and productivity especially in knowledge based companies. Value of the paper: A short overview over the main theoretical predictions and empirical findings on employee financial participation and on the development in the Baltic countries.