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

Charles P. Himmelberg, Robert Hubbard and Darius Palia

No 7209, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G3 (search for similar items in EconPapers)
Date: 2000-02
New Economics Papers: this item is included in nep-cfn and nep-fin
Note: CF
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published as Journal of Financial Economics, vol. 53, pp. 353-384, 1999.

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Related works:
Journal Article: Understanding the determinants of managerial ownership and the link between ownership and performance (1999)
Working Paper: Understanding the Determinants of Mangerial Ownership and the Link Between Ownership and Performance (1997)
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