Director Ownership, Corporate Performance, and Management Turnover
University of Colorado at Boulder - Department of Finance
Dennis C. Carey
Charles M. Elson
University of Delaware - John L. Weinberg Center for Corporate Governance
One of the goals of the corporate governance movement has been to replace the current procedurally based duty of care with an equity-based model. For such an approach to be viable, a linkage between better director management monitoring and heightened board equity ownership must be demonstrated. This Article finds such a linkage empirically. The authors report that based on an examination of a substantial number of public companies, the greater the dollar value of the outside director equity ownership: (i) the better the company?s overall performance, and (ii) the more likely in a poorly performing company that there will be a disciplinary-type CEO turnover.
Number of Pages in PDF File: 61
JEL Classification: G31, G32, G34
Date posted: December 31, 1998
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