What Determines the Allocation of Managerial Ownership within Firms? Evidence from Investment Management Firms
62 Pages Posted: 3 Sep 2010 Last revised: 8 Nov 2017
Date Written: October 17, 2014
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