Ownership structure, managerial behavior and corporate value

Patrick McColgan, D. Hillier, J. R. Davies

    Research output: Contribution to journalArticle

    102 Citations (Scopus)

    Abstract

    The nonlinear relationship between corporate value and managerial ownership is well documented. This has been attributed to the onset of managerial entrenchment, which results in a decrease of corporate value for increasing levels of managerial holdings. We propose a new structure for this relationship that accounts for the effect of conflicting managerial incentives, and external and internal disciplinary monitoring mechanisms. Using this specification as the basis for our analysis, we provide evidence that the managerial ownership-corporate value relationship is co-deterministic. This finding is at odds with recent work which reports that corporate value determines managerial ownership but not vice-versa. (c) 2005 Elsevier B.V. All rights reserved.

    Original languageEnglish
    Pages (from-to)645-660
    Number of pages15
    JournalJournal of Corporate Finance
    Volume11
    Issue number4
    DOIs
    Publication statusPublished - Sep 2005

    Keywords

    • ownership structure
    • capital expenditure
    • corporate value
    • Tobin's Q
    • MANAGEMENT TURNOVER
    • EMPIRICAL-ANALYSIS
    • AGENCY COSTS
    • TOBIN-Q
    • PERFORMANCE
    • MARKET
    • FIRM
    • TAKEOVERS
    • DETERMINANTS

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