Why managers hold shares of their firm: An empirical analysis
AbstractWe examine the relationship between CEO ownership and stock market performance of S&P 500 (S&P 1500) firms from 1994-2005 (1996-2005). We find that firms in which the CEO holds a considerable share of outstanding stocks outperform the market by up to 16% p.a. after controlling for traditional risk factors like size, book-to-market and momentum. This offers an explanation why so many CEOs hold a large fraction of their own company's stocks. They do so simply because it pays. We also examine several potential explanations why the existence of an owner CEO is not fully priced but leads to abnormal returns. --
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Bibliographic InfoPaper provided by University of Cologne, Centre for Financial Research (CFR) in its series CFR Working Papers with number 06-11.
Date of creation: 2006
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CEO-Ownership; Asset Pricing with large shareholders;
Other versions of this item:
- Ulf von Lilienfeld-Toal & Stefan Ruenzi, 2007. "Why Managers Hold Shares of Their Firms: An Empirical Analysis," SFB 649 Discussion Papers SFB649DP2007-055, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
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