Managerial ownership and firm performance in German small and medium-sized enterprises
AbstractWe 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 InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 01-72.
Date of creation: 2001
Date of revision:
company performance; managerial ownership; corporate governance; small and medium-sized enterprises;
Other versions of this item:
- Elisabeth Müller & Alexandra Spitz, 2002. "Managerial Ownership and Firm Performance in German Small and Medium-Sized Enterprises," CEP Discussion Papers dp0528, Centre for Economic Performance, LSE.
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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