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

Posted: 15 May 1998

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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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.

JEL Classification: G32, G34, N22, N82

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. Available at SSRN: https://ssrn.com/abstract=88219

Clifford G. Holderness

Boston College - Department of Finance ( email )

Carroll School of Management
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Chestnut Hill, MA 02467-3808
United States
617-552-2768 (Phone)
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Randall Kroszner (Contact Author)

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States
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National Bureau of Economic Research (NBER)

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Dennis P. Sheehan

Pennsylvania State University ( email )

Smeal College of Business
University Park, PA 16802
United States
814-863-8512 (Phone)
814-865-3362 (Fax)

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