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

  • Mueller, Elisabeth
  • Spitz, Alexandra

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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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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  18. Hellmann, Thomas F. & Puri, Manju, 2000. "Venture Capital and the Professionalization of Start-up Firms: Empirical Evidence," Research Papers 1661, Stanford University, Graduate School of Business.
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