CEO ownership and firm value

John M. Griffith
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John M. Griffith: School of Business and Economics, University of Minnesota, Duluth, MN, USA, Postal: School of Business and Economics, University of Minnesota, Duluth, MN, USA

Managerial and Decision Economics, 1999, vol. 20, issue 1, 1-8

Abstract: This paper examines the hypothesis that the amount of CEO ownership has a dominating effect on the value of the firm. Using a diverse sample of firms, firm value as measured by Tobin's q is found to be a nonmonotonic function of CEO ownership. Specifically, Tobin's q rises when the CEO owns between 0 and 15% and declines as CEO ownership increases to 50%. Beyond 50%, the value starts to rise. Firm value also is found not to be a function of management ownership when CEO ownership is separated out, indicating that CEO ownership does have a dominating effect on firm value. Copyright © 1999 John Wiley & Sons, Ltd.

Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:20:y:1999:i:1:p:1-8

DOI: 10.1002/(SICI)1099-1468(199902)20:1<1::AID-MDE914>3.0.CO;2-T

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