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Managerial ownership and performance

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  • Florackis, Chrisostomos
  • Kostakis, Alexandros
  • Ozkan, Aydin

Abstract

This study revisits the classical debate about the nature of the relationship between managerial ownership and corporate performance by using a semi-parametric estimation approach. The semi-parametric approach helps sidestep concerns associated with the potential misspecification of parametric models (e.g., the arbitrary choice of a fixed number and/or location of turning points) and enables the consideration of a wider range of non-linear behaviors. The empirical results support the existence of the initial alignment effect of managerial ownership at levels lower than 15%, while they do not lead to a strong inference on the relationship between managerial ownership and corporate performance for intermediate and high levels of managerial ownership. The results cast doubt on the findings of recent studies on the subject, which critically rely on fully parametric methods, and instead suggest the use of semi-parametric methods in estimating the shape of the ownership-performance curve.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Business Research.

Volume (Year): 62 (2009)
Issue (Month): 12 (December)
Pages: 1350-1357

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Handle: RePEc:eee:jbrese:v:62:y:2009:i:12:p:1350-1357

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Web page: http://www.elsevier.com/locate/jbusres

Related research

Keywords: Corporate performance Managerial ownership Semi-parametric approach;

References

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Citations

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Cited by:
  1. 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.
  2. Chen, Yenn-Ru & Ma, Yulong, 2011. "Revisiting the risk-taking effect of executive stock options on firm performance," Journal of Business Research, Elsevier, Elsevier, vol. 64(6), pages 640-648, June.
  3. Baños-Caballero, Sonia & García-Teruel, Pedro J. & Martínez-Solano, Pedro, 2014. "Working capital management, corporate performance, and financial constraints," Journal of Business Research, Elsevier, Elsevier, vol. 67(3), pages 332-338.

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