Picture of two heads

Open Access research that challenges the mind...

The Strathprints institutional repository is a digital archive of University of Strathclyde research outputs. Strathprints provides access to thousands of Open Access research papers by University of Strathclyde researchers, including those from the School of Psychological Sciences & Health - but also papers by researchers based within the Faculties of Science, Engineering, Humanities & Social Sciences, and from the Strathclyde Business School.

Discover more...

Ownership structure, managerial behaviour and corporate value

Davies, J.R. and Hillier, David J. and McColgan, Patrick (2005) Ownership structure, managerial behaviour and corporate value. Journal of Corporate Finance, 11 (4). pp. 645-660. ISSN 0929-1199

Full text not available in this repository. (Request a copy from the Strathclyde author)

Abstract

The nonlinear relationship between corporate value and managerial ownership is well documented. This has been attributed to the onset of managerial entrenchment, which results in a decrease of corporate value for increasing levels of managerial holdings. We propose a new structure for this relationship that accounts for the effect of conflicting managerial incentives, and external and internal disciplinary monitoring mechanisms. Using this specification as the basis for our analysis, we provide evidence that the managerial ownership-corporate value relationship is co-deterministic. This finding is at odds with recent work which reports that corporate value determines managerial ownership but not vice-versa.