Reference : CEO Ownership, Stock Market Performance, and Managerial Discretion
Scientific journals : Article
Business & economic sciences : Finance
CEO Ownership, Stock Market Performance, and Managerial Discretion
Von Lilienfeld-Toal, Ulf mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Luxembourg School of Finance (LSF) >]
Ruenzi, Stefan []
Journal of Finance
Blackwell Publishing
Yes (verified by ORBilu)
[en] 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 exter-
nal 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.

File(s) associated to this reference

Fulltext file(s):

Limited access
jofi12139.pdfPublisher postprint305.8 kBRequest a copy

Bookmark and Share SFX Query

All documents in ORBilu are protected by a user license.