Work

Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance

Year: 2000

Type: report

Abstract: Both managerial ownership and performance are endogenously determined by exogenous (and only partly observed) changes in the firm's contracting environment.We extend the cross-sectional results of Demsetz and Lehn (1985) and use panel data to show that managerial ownership is explained by key variables in the contracting environment in ways consistent with the predictions of principal-agent models.A large fraction of the cross-sectional variation in managerial ownership is explained by unobserved firm heterogeneity.Moreover, after controlling both for observed firm characteristics and firm fixed effects, we cannot conclude (econometrically) that changes in managerial ownership affect firm performance.

Source: National Bureau of Economic Research

DOI: 10.3386/w7209

Authors: Charles Himmelberg, R. Glenn Hubbard, Darius Palia

Institutions: National Bureau of Economic Research, Harvard University, University of Florida, Columbia University, Virginia Tech, London School of Economics and Political Science

Language: English

Topic: Corporate Finance and Governance

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2095608235

Cites: 47

Cited by: 714

Related to: 9