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EPRC is a leading institute in Europe for comparative research on public policy, with a particular focus on regional development policies. Spanning 30 European countries, EPRC research programmes have a strong emphasis on applied research and knowledge exchange, including the provision of policy advice to EU institutions and national and sub-national government authorities throughout Europe.

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Do ownership structures affect the risk incentive provided by managerial portfolio holdings? An empirical analysis of UK alternative investment market companies

Pinto, Helena (2010) Do ownership structures affect the risk incentive provided by managerial portfolio holdings? An empirical analysis of UK alternative investment market companies. In: EFMA 2010, 2010-01-01.

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Abstract

This paper analyzes the wealth and risk incentive effects of managerial options and shareholdings on the hedging probability of UK listed Alternative Investment Market (AIM) companies. We find that the wealth incentive effect provided by managerial option holdings increases the hedging likelihood. On the contrary, the wealth incentive effect provided by managerial shareholdings decreases the hedging likelihood. Further tests show that the incentive effect provided by managerial shareholdings is significantly different if managers are not substantial shareholders of the company. Managers with substantial ownership are significantly less risk averse. Thus, the size and ownership structure characteristics of AIM companies seem to result in similarities between managers‟ and owners‟ behavior.