CEO Ownership, Stock Market Performance, and Managerial Discretion

• 成果类型: Article
• 署名作者: Von Lilienfeld-Toal, Ulf; Ruenzi, Stefan
• 署名单位: Stockholm School of Economics; University of Mannheim
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12139
• 发表日期: 2014
• 页码: 1013-1050
• 关键词: CORPORATE GOVERNANCE; cross-section; SHAREHOLDER ACTIVISM; AGENCY COSTS; firm; returns; RISK; incentives; pay

摘要

We examine the relationship between CEO ownership and stock market performance. A strategy based on public information about managerial ownership delivers annual abnormal returns of 4% to 10%. The effect is strongest among firms with weak external governance, weak product market competition, and large managerial discretion, suggesting that CEO ownership can reverse the negative impact of weak governance. Furthermore, owner-CEOs are value increasing: they reduce empire building and run their firms more efficiently. Overall, our findings indicate that the market does not correctly price the incentive effects of managerial ownership, suggesting interesting feedback effects between corporate finance and asset pricing.