TY - JOUR
T1 - Understanding the determinants of managerial ownership and the link between ownership and performance: Comment
AU - Zhou, Xianming
PY - 2001/12
Y1 - 2001/12
N2 - Himmelberg et al. (J. Financial Econom. 53 (1999) 353-384) argue that fixed effects estimators should be used in examination of the relationship between managerial ownership and firm performance. I show that managerial ownership, while substantially different across firms, typically changes slowly from year to year within a company. With rational managers maximising long-term utility, small, one-year changes in ownership are not likely to reflect notable changes in incentives that would lead to substantive within-year changes in performance. By relying on within variation, fixed effects estimators may not detect an effect of ownership on performance even if one exists.
AB - Himmelberg et al. (J. Financial Econom. 53 (1999) 353-384) argue that fixed effects estimators should be used in examination of the relationship between managerial ownership and firm performance. I show that managerial ownership, while substantially different across firms, typically changes slowly from year to year within a company. With rational managers maximising long-term utility, small, one-year changes in ownership are not likely to reflect notable changes in incentives that would lead to substantive within-year changes in performance. By relying on within variation, fixed effects estimators may not detect an effect of ownership on performance even if one exists.
KW - Corporate governance
KW - G32
KW - L14
KW - L22
KW - Managerial ownership
UR - http://www.scopus.com/inward/record.url?scp=0003300715&partnerID=8YFLogxK
U2 - 10.1016/S0304-405X(01)00085-X
DO - 10.1016/S0304-405X(01)00085-X
M3 - Article
AN - SCOPUS:0003300715
SN - 0304-405X
VL - 62
SP - 559
EP - 571
JO - Journal of Financial Economics
JF - Journal of Financial Economics
IS - 3
ER -