Abstract

http://ssrn.com/abstract=283975
 
 

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Performance Consequences of Mandatory Increases in Executive Stock Ownership


John E. Core


Massachusetts Institute of Technology (MIT) - Sloan School of Management

David F. Larcker


Stanford University - Graduate School of Business


Journal of Financial Economics, Forthcoming

Abstract:     
We examine a sample of firms that adopt "target ownership plans," under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership increases significantly in the two years following plan adoption. We also observe that excess accounting returns and stock returns are higher after the plan is adopted. Thus, for our sample of firms, the required increases in the level of managerial equity ownership result in improvements in firm performance.

Keywords: Managerial ownership; Corporate governance; Financial performance

JEL Classification: G30, G32, J33, L14, L22

Accepted Paper Series


Not Available For Download

Date posted: November 24, 2001  

Suggested Citation

Core, John E. and Larcker, David F., Performance Consequences of Mandatory Increases in Executive Stock Ownership. Journal of Financial Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=283975

Contact Information

John E. Core (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
E62-416
Cambridge, MA 02138
United States
David F. Larcker
Stanford University - Graduate School of Business ( email )
Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

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