Journal of Corporate Finance Vol. 5 No. 4 1999
Managerial ownership and firm performance: A re-examination using productivity measurement
Abstract
The role of productivity in firm performance is of fundamental importance to the US economy. Consistent with the corporate finance approach, this paper uses the ownership stake of a firm's managers as an argument in estimating the firm's production function. Accordingly, this paper brings together the corporate finance and productivity literature. Using a large sample of randomly selected manufacturing firms that does not suffer from any survivorship or large firm size biases, we find that managerial ownership changes are positively related to changes in productivity. We also find a higher sensitivity of changes in managerial ownership to changes in productivity for firms who experience greater than the median change in managerial ownership. These results are robust to including lagged estimates of production inputs, year dummies and separate dummies for each firm to control for unobservable firm characteristics. In addition, we find that the stock market rewards firms with increases in firm value when these firms increase their level of productivity.
- DOI
- 10.1016/s0929-1199(99)00009-7
- Volume
- 5
- Issue
- 4
- Pages
- 323-339
- Language
- en
- Sources
- bibtex:phds-export.bib crossref openalex