Managerial Ownership and Performance

33 Pages Posted: 12 Feb 2008 Last revised: 15 Mar 2011

See all articles by Chris Florackis

Chris Florackis

University of Liverpool (UK)

Alexandros Kostakis

University of Liverpool Management School; University of Manchester - Manchester Business School

Aydin Ozkan

Hull University Business School (HUBS)

Date Written: March 13, 2011

Abstract

This study revisits the classical debate about the nature of the relationship between managerial ownership and corporate performance by using a semi-parametric estimation approach. The semi-parametric approach helps sidestep concerns associated with the potential misspecification of parametric models (e.g., the arbitrary choice of a fixed number and/or location of turning points) and enables the consideration of a wider range of non-linear behaviors. The empirical results support the existence of the initial alignment effect of managerial ownership (i.e., for levels lower than 15%), while they do not lead to a strong inference on the relationship between managerial ownership and corporate performance for intermediate and high levels of managerial ownership. The results cast doubt on the findings of recent studies on the subject, which critically rely on fully parametric methods, suggesting instead the use of semi-parametric methods to estimate the shape of the ownership-performance curve.

Keywords: Corporate performance, managerial ownership, semi-parametric approach

Suggested Citation

Florackis, Chris and Kostakis, Alexandros and Ozkan, Aydin, Managerial Ownership and Performance (March 13, 2011). Journal of Business Research, Vol. 62, pp. 1350-1357, 2009. Available at SSRN: https://ssrn.com/abstract=1092406

Chris Florackis (Contact Author)

University of Liverpool (UK) ( email )

The Management School
University of Liverpool
Liverpool, L 697ZH
United Kingdom

Alexandros Kostakis

University of Liverpool Management School ( email )

Chatham Building
Liverpool, L69 7ZH
United Kingdom

HOME PAGE: http://www.alexkostakis.com

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Aydin Ozkan

Hull University Business School (HUBS) ( email )

Hull, HU6 7RX
United Kingdom

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