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Managerial ownership and firm performance in German small and medium-sized enterprises

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  • Mueller, Elisabeth
  • Spitz, Alexandra

Abstract

We analyze the relationship between managerial ownership and company performance, testing the incentive and entrenchment hypothesis. Differently from previous literature, we focus on small and medium-sized private enterprises which constitute an important part of the German economy. We use a panel of 356 companies in the German business-related service sector for the years 1997-2000. Our findings are that performance, measured by survey-based profit information, is increasing in managerial ownership up to around 40 percent. We do not find a significant entrenchment effect, possibly because at levels at which managers could become entrenched, they already bear a large proportion of the costs and have therefore an incentive to maximize company value. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 01-72.

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Date of creation: 2001
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Handle: RePEc:zbw:zewdip:5428

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Keywords: company performance; managerial ownership; corporate governance; small and medium-sized enterprises;

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Cited by:
  1. Marko Simoneti & Aleksandra Gregoric, 2004. "Managerial ownership and corporate performance in Slovenian post-privatisation period," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 1(2), pages 217-241, December.
  2. Väänänen, Lotta, 2003. "Agency Costs and R&D: Evidence from Finnish SMEs," Discussion Papers 859, The Research Institute of the Finnish Economy.

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