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Author: Rüdiger Fahlenbrach Publisher: ISBN: Category : Languages : en Pages : 49
Book Description
From 1988 to 2003, the average change in managerial ownership is significantly negative every year for American firms. We find that managers are more likely to significantly decrease their ownership when their firms are performing well and more likely to increase their ownership when their firms become financially constrained. When controlling for past stock returns, we find that large increases in managerial ownership increase q. This result is driven by increases in shares held by officers, while increases in shares held by directors appear unrelated to changes in firm value. There is no evidence that large decreases in ownership have an adverse impact on firm value. We rely on the dynamics of the managerial ownership/firm value relation to mitigate concerns in the literature about the endogeneity of managerial ownership.
Author: Rüdiger Fahlenbrach Publisher: ISBN: Category : Languages : en Pages : 49
Book Description
From 1988 to 2003, the average change in managerial ownership is significantly negative every year for American firms. We find that managers are more likely to significantly decrease their ownership when their firms are performing well and more likely to increase their ownership when their firms become financially constrained. When controlling for past stock returns, we find that large increases in managerial ownership increase q. This result is driven by increases in shares held by officers, while increases in shares held by directors appear unrelated to changes in firm value. There is no evidence that large decreases in ownership have an adverse impact on firm value. We rely on the dynamics of the managerial ownership/firm value relation to mitigate concerns in the literature about the endogeneity of managerial ownership.
Author: Bradley W. Benson Publisher: ISBN: Category : Languages : en Pages : 40
Book Description
Whether equity-based compensation and equity ownership aligns the interests of managers with stockholders is an important question in finance. Early studies found an inverted U-shaped relation between managerial ownership and firm value, but later studies using firm fixed effects found no relation. Managerial ownership levels change very slowly over time which may mask an ownership effect on firm value when using a fixed effect model. This is due to a much smaller within firm variation than between firm variation. We demonstrate that using pay-performance semi-elasticity, rather than pay-performance sensitivity as a measure of managerial ownership incentives, results in meaningful variation within firm over time. The greater within firm variation increases the power to detect a relation between managerial ownership and firm value with fixed effect regressions. As in the early research on this issue, we find a significant inverted U-shaped relation between managerial ownership and Tobin's Q in fixed effects regressions and after controlling for endogeneity with both two-stage and three-stage least squares regressions. Our results are consistent with incentive alignment at low levels and risk aversion at high levels of managerial ownership.
Author: Mara Faccio Publisher: ISBN: Category : Languages : en Pages : 42
Book Description
We analyze the simultaneous relationship between managerial ownership, board structure, and firm value, using a sample of all UK non-financial listed companies. We test the hypothesis that managers in the UK should become entrenched at a higher level of ownership compared to their US counterparts because of institutional differences across the two markets. We find a strong U-shaped relationship between the level of managerial ownership and the probability that the roles of chairman and CEO are split, that a non-executive director is appointed as chairman, and the proportion of non-executive directors on the board. However, we report a generally weak relationship between firm value and managerial ownership, board structure and the combination of managerial ownership and board structure. Our results cast doubt on the effectiveness of these internal corporate governance mechanisms.
Author: Bradley Warren Benson Publisher: ISBN: Category : Languages : en Pages : 452
Book Description
Managerial ownership levels change slowly over time. The slow change masks a significant ownership effect when testing the relation between managerial ownership and firm value using firm fixed effects to control for unobserved firm heterogeneity because of much smaller within variation than between variation. I demonstrate that using pay-performance semi-elasticity as a measure of managerial ownership incentives results in meaningful changes within firm over time. The greater within firm variation amplifies the effect size and increases the power to detect a relation between managerial ownership and firm value in firm fixed effects regressions. Using pay-performance semi-elasticity, I find a significant hump shaped relation between managerial ownership and Tobin's Q in firm fixed effects regressions and two-stage least squares regressions with firm fixed effects to control for endogeneity. My results contradict the results of previous studies which find no relation between managerial ownership and firm value in firm fixed effects regressions.
Author: Christian Alexander Wegener Publisher: GRIN Verlag ISBN: 3640814479 Category : Business & Economics Languages : en Pages : 46
Book Description
Seminar paper from the year 2006 in the subject Business economics - Investment and Finance, grade: sehr gut, University of Münster (Finance Center Münster), language: English, abstract: Many scholars have analyzed whether and how management share ownership should be used in terms of a corporate governance instrument to enhance corporate performance. The empirical results, however, have been inconclusive till this day. This seminar paper attempts to explain the problems and difficulties that underlie the obscurity and how researches might eventually unravel this challenge.
Author: Cheng-Few Lee Publisher: Springer Science & Business Media ISBN: 0387262849 Category : Business & Economics Languages : en Pages : 861
Book Description
This is a major new reference work covering all aspects of finance. Coverage includes finance (financial management, security analysis, portfolio management, financial markets and instruments, insurance, real estate, options and futures, international finance) and statistical applications in finance (applications in portfolio analysis, option pricing models and financial research). The project is designed to attract both an academic and professional market. It also has an international approach to ensure its maximum appeal. The Editors' wish is that the readers will find the encyclopedia to be an invaluable resource.
Author: Moon H. Song Publisher: ISBN: Category : Languages : en Pages :
Book Description
This study explores the relation between managerial ownership and firm value by examining a sample of firms that announce dual class recapitalizations and the insider trading activity that precede these announcements. Insider trading activity, unlike the recapitalization, requires managers to commit their personal wealth and therefore serves as an indicator of the motivation behind the recapitalization. The recapitalization, in effect, allows managers to magnify the increase in vote ownership that results from insider buying and offsets the reduction in vote ownership that results from insider selling. This study adds to our understanding of dual class recapitalizations by linking the wealth effects and changes in ownership concentration with manager-shareholder agency issues that result from the recapitalization and insider trading activity. Results show a positive relation between the change in firm value and ownership for recapitalizations before the 1984 New York Stock Exchange moratorium on delisting dual class firms when ownership was high and control was firmly established. A negative relation exists for recapitalizations since 1984 when ownership levels were lower and voting control not assured. Results support the notion that more recent recapitalizations entrenched managers.
Author: Rüdiger Fahlenbrach
Author: Rüdiger Fahlenbrach
Author: Rüdiger Fahlenbrach
Author: 
Author: Bradley W. Benson
Author: Mara Faccio
Author: Bradley Warren Benson
Author: Christian Alexander Wegener
Author: Shawn David Phelps
Author: Cheng-Few Lee
Author: Moon H. Song