Why are Firms with More Managerial Ownership Worth Less? / Kornelia Fabisik, Rüdiger Fahlenbrach, René M. Stulz, Jérôme P. Taillard.

Format:

Book

Author/Creator:

Fabisik, Kornelia.

Contributor:

National Bureau of Economic Research.

Fahlenbrach, Rüdiger.

Stulz, René M.

Taillard, Jérôme P.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25352.

NBER working paper series no. w25352

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

Using more than 50,000 firm-years from 1988 to 2015, we show that the empirical relation between a firm's Tobin's q and managerial ownership is systematically negative. When we restrict our sample to larger firms as in the prior literature, our findings are consistent with the literature, showing that there is an increasing and concave relation between q and managerial ownership. We show that these seemingly contradictory results are explained by cumulative past performance and liquidity. Better performing firms have more liquid equity, which enables insiders to more easily sell shares after the IPO, and they also have a higher Tobin's q.

Notes:

Print version record

December 2018.