Abstract

http://ssrn.com/abstract=1776643
 
 

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Shareholder Rights, Managerial Incentives, and Firm Value


Feng Zhang


University of Utah - Department of Finance

November 20, 2013


Abstract:     
This paper investigates interactions between two central corporate governance mechanisms: shareholder rights and managerial ownership. I find that the effect of managerial ownership on firm value crucially depends on shareholder rights. Managerial ownership enhances firm value when shareholder rights are strong, but reduces firm value when shareholder rights are weak. Announcement returns of manager share purchases in the open market are also lower for firms with weak shareholder rights. Furthermore, firms with weak shareholder rights have significantly lower managerial ownership. My findings suggest that shareholder rights and managerial ownership are complementary governance mechanisms.

Number of Pages in PDF File: 53

Keywords: Antitakeover provisions, managerial incentives, firm value, compensation contract

JEL Classification: G32, G34

working papers series





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Date posted: March 6, 2011 ; Last revised: November 21, 2013

Suggested Citation

Zhang, Feng, Shareholder Rights, Managerial Incentives, and Firm Value (November 20, 2013). Available at SSRN: http://ssrn.com/abstract=1776643 or http://dx.doi.org/10.2139/ssrn.1776643

Contact Information

Feng Zhang (Contact Author)
University of Utah - Department of Finance ( email )
David Eccles School of Business
Salt Lake City, UT 84112-9303
United States
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