Understanding the determinants of managerial ownership and the link between ownership and performance: Comment

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341 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)559-571
Number of pages13
JournalJournal of Financial Economics
Volume62
Issue number3
DOIs
Publication statusPublished - Dec 2001
Externally publishedYes

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