What Determines the Allocation of Managerial Ownership within Firms? Evidence from Investment Management Firms

Dimmock, Stephen G.; Gerken, William Christopher; Marietta-Westberg, Jennifer

doi:10.2139/ssrn.1669800

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What Determines the Allocation of Managerial Ownership within Firms? Evidence from Investment Management Firms

62 Pages Posted: 3 Sep 2010 Last revised: 17 Oct 2014

See all articles by Stephen G. Dimmock

Stephen G. Dimmock

National University of Singapore; Asian Bureau of Finance and Economic Research (ABFER)

Jennifer Marietta-Westberg

U.S. Securities and Exchange Commission

Date Written: October 17, 2014

Abstract

We show that the allocation of managerial ownership to individuals within firms varies depending upon the joint distribution of decision control and decision management rights. Using a unique dataset of institutional investment management firms, we show that ownership is higher for managers: with both executive and operational responsibilities; when benefits of cooperation are higher; and with large contributions to firm value. Consistent with career concerns, we find increases in a manager's ownership are associated with increases in unsystematic risk. Ownership dispersion within the firm is associated with the allocation of monitoring and operational roles and the potential benefits of cooperation.

Keywords: Manager Ownership, Managerial Ownership, Employee Ownership, Agency, Incentives, Institutional Investment Managers

JEL Classification: G32, G3, G2, G23

Suggested Citation: Suggested Citation

Dimmock, Stephen G. and Gerken, William Christopher and Marietta-Westberg, Jennifer, What Determines the Allocation of Managerial Ownership within Firms? Evidence from Investment Management Firms (October 17, 2014). Available at SSRN: https://ssrn.com/abstract=1669800 or http://dx.doi.org/10.2139/ssrn.1669800