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Managerial Ownership and Firm Performance in German Small and Medium-Sized Enterprises

  • Elisabeth Müller
  • Alexandra Spitz

This paper studies the effect of managerial ownership on performance and the determinants of managerial ownership for small and medium-sized private companies. We use a panel of around 1300 firms in the German business-related service sector for the years 1997-2000. Managerial ownership up to around 80 per cent has a positive impact on firm performance (incentive effect); for higher shares the effect becomes negative (entrenchment effect). Moreover, risk-aversion of managers and signalling of firm quality leads to a non-linear relationship between managerial ownership and the risk exposure of a firm. The determinants of performance and ownership are estimated simultaneously.

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File URL: http://cep.lse.ac.uk/pubs/download/DP0528.pdf
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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0528.

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Date of creation: Apr 2002
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Handle: RePEc:cep:cepdps:dp0528
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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