Managerial share ownership and operating performance: Do independent and executive directors have different incentives?

Arifur Khan, Paul Mather and Balasingham Balachandran
Additional contact information
Paul Mather: Department of Accounting, La Trobe University, Melbourne, VIC, Australia
Balasingham Balachandran: Department of Finance, La Trobe University, Melbourne, VIC, Australia

Australian Journal of Management, 2014, vol. 39, issue 1, 47-71

Abstract: We investigate the relationship between managerial share ownership (MSO) and earnings as a measure of operating performance in Australia. To mitigate potential earnings management, we also use discretionary accrual adjusted earnings as an alternative measure of performance. We document a negative relation between MSO and performance followed by a positive relation. We suggest that these unique results are an artefact of certain Australian institutional features and imply that the ownership–performance relation is context-specific, with the wider corporate governance systems influencing the theorised incentive effects. We also posit that executive directors and independent directors have different ownership–performance incentives. Our results are consistent with this proposition and suggest that independent directors may be immune to the theorised incentive alignment or entrenchment effects associated with share ownership.

Keywords: Entrenchment; incentive alignment; managerial share ownership; performance (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0312896212463152 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:39:y:2014:i:1:p:47-71

DOI: 10.1177/0312896212463152

Access Statistics for this article

More articles in Australian Journal of Management from Australian School of Business
Bibliographic data for series maintained by SAGE Publications ().