IDEAS home Printed from https://ideas.repec.org/a/fma/fmanag/bathala94.html
   My bibliography  Save this article

Managerial Ownership, Debt Policy, and the Impact of Institutional Holdings: An Agency Perspective

Author

Listed:
  • Chenchuramaiah T. Bathala
  • Kenneth P. Moon
  • Ramesh P. Rao

Abstract

This study investigates the effects of' institutional ownership on the debt policy and managerial ownership of the firm. Earlier literature on the agency model of the firm widely recognizes that the use of managerial stock ownership and external debt play an important role in limiting agency conflicts and enhancing firm value. The literature also recognizes that external monitors, such as institutional investors, can serve a useful role in limiting agency problems in the firm. However, investigations into the usefulness of' these agency-conflict-reducing mechanisms have tended to treat each in isolation with little attempt to study the inter-relationships among them. This study examines the impact of institutional holdings on managerial ownership and debt policy in an integrated framework utilizing a simultaneous system of equations estimation procedure. The study hypothesizes that the use of debt and managerial stock ownership are inversely related to institutional ownership in the firm. The empirical evidence provided in this study is consistent with this hypothesis.

Suggested Citation

  • Chenchuramaiah T. Bathala & Kenneth P. Moon & Ramesh P. Rao, 1994. "Managerial Ownership, Debt Policy, and the Impact of Institutional Holdings: An Agency Perspective," Financial Management, Financial Management Association, vol. 23(3), Fall.
  • Handle: RePEc:fma:fmanag:bathala94
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fma:fmanag:bathala94. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Courtney Connors). General contact details of provider: http://edirc.repec.org/data/fmaaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.