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Were the Good Old Days That Good? Changes in Managerial Stock Ownership Since the Great Depression
Author(s) -
Holderness Clifford G.,
Kroszner Randall S.,
Sheehan Dennis P.
Publication year - 1999
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/0022-1082.00114
Subject(s) - corporate governance , business , stock exchange , volatility (finance) , accounting , robustness (evolution) , monetary economics , finance , economics , biochemistry , chemistry , gene
We document that ownership by officers and directors of publicly traded firms is on average higher today than earlier in the century. Managerial ownership has risen from 13 percent for the universe of exchange‐listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the increase in managerial ownership.