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Managerial Ownership and Company Performance in German Small and Medium- Sized Private Enterprises

Author

Listed:
  • Mueller Elisabeth

    (Centre for European Economic Research,Mannheim, Germany)

  • Spitz-Oener Alexandra

    (Humboldt University,Berlin, Germany)

Abstract

We analyse 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 by up to around 40 per cent. 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.

Suggested Citation

  • Mueller Elisabeth & Spitz-Oener Alexandra, 2006. "Managerial Ownership and Company Performance in German Small and Medium- Sized Private Enterprises," German Economic Review, De Gruyter, vol. 7(2), pages 233-247, May.
    • Handle: RePEc:bpj:germec:v:7:y:2006:i:2:p:233-247
    DOI: 10.1111/j.1468-0475.2006.00154.x
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    Cited by:

    1. Mina Zare & Mahmoud Moeinadin & Forough Heyrani, 2014. "Investigating the Relationship between Board Characteristics and the Sustainable Development of Companies Listed at Tehran Stock Exchange," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 4(6), pages 384-401, June.
    2. repec:bdu:oejbsm:v:2:y:2017:i:2:p:50-81:id:256 is not listed on IDEAS
    3. repec:bdu:oejbsm:v:2:y:2017:i:2:p:107-135:id:258 is not listed on IDEAS
    4. Huang, Hsu-Huei, 2019. "Audit committees and systematic risk: Evidence from Taiwan’s regulatory change," The North American Journal of Economics and Finance, Elsevier, vol. 47(C), pages 477-491.
    5. Jenny Meyer, 2011. "Workforce age and technology adoption in small and medium-sized service firms," Small Business Economics, Springer, vol. 37(3), pages 305-324, October.
    6. Meyer, Jenny, 2007. "Older Workers and the Adoption of New Technologies," ZEW Discussion Papers 07-050, ZEW - Leibniz Centre for European Economic Research.
    7. Jörg Döpke & Karsten Müller & Lars Tegtmeier, 2023. "Moments of cross‐sectional stock market returns and the German business cycle," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 52(2), July.
    8. repec:bdu:oejbsm:v:2:y:2017:i:2:p:82-106:id:257 is not listed on IDEAS
    9. Chee Yoong Liew & YoungKyung Ko & Bee Lian Song & Saraniah Thechina Murthy, 2022. "Directors’ compensation, ownership concentration and the value of the firm: evidence from an emerging market," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(1), pages 155-188, March.
    10. Dwi Prastowo Darminto, 2019. "Rural Bank Financial Performance: Evidence from Indonesia," The Journal of Social Sciences Research, Academic Research Publishing Group, vol. 5(2), pages 491-497, 02-2019.
    11. Liew, Chee Yoong & Ko, Young Kyung & Song, Bee Lian & Murthy, Saraniah Thechina, 2019. "Directors’ remuneration, expropriation and firm performance in Malaysia: evidence from non-executive directors’ service duration within the remuneration committee," MPRA Paper 99703, University Library of Munich, Germany.
    12. Haris Arshad & Attiya Yasmin Javid, 2014. "Does Inside Ownership Matters in Financial Decisions and Firm Performance: Evidence from Manufacturing Sector of Pakistan," PIDE-Working Papers 2014:107, Pakistan Institute of Development Economics.
    13. Huang, Hsu-Huei & Chan, Min-Lee & Huang, I-Hsiang & Chang, Chih-Hsiang, 2011. "Stock price volatility and overreaction in a political crisis: The effects of corporate governance and performance," Pacific-Basin Finance Journal, Elsevier, vol. 19(1), pages 1-20, January.
    14. Jenny Meyer, 2010. "Does Social Software Support Service Innovation?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 17(3), pages 289-311.
    15. Meyer, Jenny, 2008. "The Adoption of New Technologies and the Age Structure of the Workforce," ZEW Discussion Papers 08-045, ZEW - Leibniz Centre for European Economic Research.

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