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Management Ownership and Corporate Performance: An Empirical Analysis

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Author Info

  • Randall Morck
  • Andrei Shleifer
  • Robert W. Vishny

Abstract

We investigate the relation between management ownership and corporate performance, as measured by Tobin's Q. In a cross-section of Fortune 500 firms, Tobin's Q first increases and then declines as board of directors holdings rise. For older firms there is weak evidence that Q is lower when a firm is run by a member of the founding family than when it is run by an officer unrelated to the founder.

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File URL: http://www.nber.org/papers/w2055.pdf
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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2055.

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Date of creation: Oct 1986
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Publication status: published as "Management Ownership and Market Valuation: An Empirical Analysis" Journal of Financial Economics, March, 1988
Handle: RePEc:nbr:nberwo:2055

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References

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  1. DeAngelo, Harry & DeAngelo, Linda, 1985. "Managerial ownership of voting rights : A study of public corporations with dual classes of common stock," Journal of Financial Economics, Elsevier, Elsevier, vol. 14(1), pages 33-69, March.
  2. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 94(3), pages 461-88, June.
  3. Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, American Finance Association, vol. 32(2), pages 371-87, May.
  4. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, Elsevier, vol. 11(1-4), pages 5-50, April.
  5. Ralph A. Walkling & Michael S. Long, 1984. "Agency Theory, Managerial Welfare, and Takeover Bid Resistance," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 54-68, Spring.
  6. Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(2), pages 288-307, April.
  7. Bronwyn H. Hall & Clint Cumminq & Elizabeth S. Laderman & Joy Mundy, 1988. "The R&D Master File Documentation," NBER Technical Working Papers, National Bureau of Economic Research, Inc 0072, National Bureau of Economic Research, Inc.
  8. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, Elsevier, vol. 3(4), pages 305-360, October.
  9. Murphy, Kevin J., 1985. "Corporate performance and managerial remuneration : An empirical analysis," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 7(1-3), pages 11-42, April.
  10. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
  11. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 301-25, June.
  12. Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(6), pages 1155-77, December.
  13. Bruce Johnson, W. & Magee, Robert P. & Nagarajan, Nandu J. & Newman, Harry A., 1985. "An analysis of the stock price reaction to sudden executive deaths : Implications for the managerial labor market," Journal of Accounting and Economics, Elsevier, Elsevier, vol. 7(1-3), pages 151-174, April.
  14. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 26(2), pages 375-90, June.
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Citations

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Cited by:
  1. Berger, Allen N. & Bonaccorsi di Patti, Emilia, 2006. "Capital structure and firm performance: A new approach to testing agency theory and an application to the banking industry," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(4), pages 1065-1102, April.
  2. Durnev, Art & Kim, E. Han, 2004. "To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2004-7, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  3. Mihir A. Desai & Dhammika Dharmapala, 2004. "Corporate Tax Avoidance and High Powered Incentives," NBER Working Papers 10471, National Bureau of Economic Research, Inc.
  4. Mehar, Ayub, 2002. "Corporate governance and dividend policy," MPRA Paper 619, University Library of Munich, Germany, revised 2003.
  5. Artyom Durnev & Randall Morck & Bernard Yeung, 2001. "Capital Markets and Capital Allocation: Implications for Economies in Transition," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 417, William Davidson Institute at the University of Michigan.
  6. Bennedsen, Morten & Meisner, Kasper, Nielsen, 2006. "The Principle of Proportionality," Working Papers, Copenhagen Business School, Department of Economics 22-2005, Copenhagen Business School, Department of Economics.
  7. Douglas Cumming & Grant Fleming & Armin Schwienbacher, 2008. "Financial intermediaries, ownership structure and the provision of venture capital to SMEs: evidence from Japan," Small Business Economics, Springer, Springer, vol. 31(1), pages 59-92, June.
  8. Art Durnev & E. Han Kim, 2003. "Corporate Stability and Economic Growth," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 554, William Davidson Institute at the University of Michigan.
  9. Mihir A Desai & Dhammika Dharmapala, 2009. "Corporate Tax Avoidance and Firm Value," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 537-546, August.
  10. Sazali Abidin & Krishna Reddy & Liehui Chen, 2012. "Determinants of ownership structure and performance of seasoned equity offerings: Evidence from Chinese stock markets," International Journal of Managerial Finance, Emerald Group Publishing, Emerald Group Publishing, vol. 8(4), pages 304-331.
  11. Narjess Boubakri & Jean-Claude Cosset & Omrane Guedhami, 2003. "Postprivatization Corporate Governance: the Role of Ownership Structure and Investor Protection," Working Papers, Fondazione Eni Enrico Mattei 2003.37, Fondazione Eni Enrico Mattei.

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