Accounting Papers

Document Type

Journal Article

Date of this Version

6-2002

Publication Source

Journal of Financial Economics

Volume

64

Issue

3

Start Page

317

Last Page

340

DOI

10.1016/S0304-405X(02)00127-7

Abstract

We examine a sample of firms that adopt “target ownership plans”, under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership increases significantly in the two years following plan adoption. We also observe that excess accounting returns and stock returns are higher after the plan is adopted. Thus, for our sample of firms, the required increases in the level of managerial equity ownership result in improvements in firm performance.

Copyright/Permission Statement

© 2002. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0

Comments

At the time of publication, John Core was pursuing a PhD from the Wharton School, University of Pennsylvania; he is now the Nanyang Technological University Professor and a Professor of Accounting at the MIT Sloan School of Management.

Keywords

managerial ownership, corporate governance, financial performance

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Date Posted: 27 November 2017

This document has been peer reviewed.