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Insider Ownership and the Value of the Bucharest Stock Exchange Listed Companies: Convergence-of-Interest or Entrenchment Effect?

Author

Listed:
  • Georgeta Vintila

    (The Bucharest University of Economic Studies, Department of Finance, Romania.)

  • Stefan Cristian Gherghina

    (The Bucharest University of Economic Studies, Department of Finance, Romania.)

Abstract

The aim of this paper is to provide empirical evidence regarding the effect of insider ownership on firm value which stems from the lack of such study for the case of Romania. By using a sample of companies listed on the Bucharest Stock Exchange, over the period 2007-2011, our results showed a negative effect of insider shareholdings on firm value. Likewise, the negative effect on firm value was confirmed for insider ownership one-year lagged. Thereby, unconcerned to the level of shareholdings, we ascertained the entrenchment effect, opposite to the goal of shareholders wealth maximization.

Suggested Citation

  • Georgeta Vintila & Stefan Cristian Gherghina, 2014. "Insider Ownership and the Value of the Bucharest Stock Exchange Listed Companies: Convergence-of-Interest or Entrenchment Effect?," International Journal of Economics and Financial Issues, Econjournals, vol. 4(1), pages 183-195.
    • Handle: RePEc:eco:journ1:2014-01-17
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    More about this item

    Keywords

    corporate governance; agency theory; insider ownership; firm value; panel data regression models;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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