Director Ownership, Corporate Performance, and Management Turnover

61 Pages Posted: 31 Dec 1998  

Sanjai Bhagat

University of Colorado at Boulder - Department of Finance

Dennis C. Carey

Spencer Stuart

Charles M. Elson

University of Delaware - John L. Weinberg Center for Corporate Governance

Abstract

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.

JEL Classification: G31, G32, G34

Suggested Citation

Bhagat, Sanjai and Carey, Dennis C. and Elson, Charles M., Director Ownership, Corporate Performance, and Management Turnover. Available at SSRN: https://ssrn.com/abstract=134488 or http://dx.doi.org/10.2139/ssrn.134488

Sanjai Bhagat (Contact Author)

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States
303-492-7821 (Phone)

Dennis C. Carey

Spencer Stuart ( email )

2005 Market St.
Suite 2350
Philadelphia, PA 19103
United States
215-814-1601 (Phone)
215-814-1682 (Fax)

Charles M. Elson

University of Delaware - John L. Weinberg Center for Corporate Governance ( email )

Alfred Lerner Hall, Room 104
Newark, DE 19716
United States
302-831-6157 (Phone)

Paper statistics

Downloads
1,906
Rank
5,860
Abstract Views
6,779