Date of this Version
Journal of Financial Economics
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.
© 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
managerial ownership, corporate governance, financial performance
Core, J., & Larcker, D. F. (2002). Performance Consequences of Mandatory Increases in Executive Stock Ownership. Journal of Financial Economics, 64 (3), 317-340. http://dx.doi.org/10.1016/S0304-405X(02)00127-7
Date Posted: 27 November 2017
This document has been peer reviewed.