Were the Good Old Days that Good? Changes in Managerial Stock Ownership Since the Great Depression

55 Pages Posted: 10 Jun 2000 Last revised: 29 Nov 2022

See all articles by Clifford G. Holderness

Clifford G. Holderness

Boston College - Department of Finance

Randall Kroszner

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

Dennis P. Sheehan

Pennsylvania State University

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Date Written: May 1998

Abstract

We document that ownership by officers and directors of publicly-traded firms is on average higher today than earlier in the century. Managerial ownership rises from 13 percent for the universe of exchange-listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the increase in managerial ownership.

Suggested Citation

Holderness, Clifford G. and Kroszner, Randall and Sheehan, Dennis P., Were the Good Old Days that Good? Changes in Managerial Stock Ownership Since the Great Depression (May 1998). NBER Working Paper No. w6550, Available at SSRN: https://ssrn.com/abstract=226283

Clifford G. Holderness (Contact Author)

Boston College - Department of Finance ( email )

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Randall Kroszner

University of Chicago - Booth School of Business ( email )

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Dennis P. Sheehan

Pennsylvania State University ( email )

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