Working Paper: NBER ID: w2055
Authors: Randall Morck; Andrei Shleifer; Robert Vishny
Abstract: We investigate the relation between management ownership and corporate performance, as measured by Tobin's Q. In a cross-section of Fortune 500 firms, Tobin's Q first increases and then declines as board of directors holdings rise. For older firms there is weak evidence that Q is lower when a firm is run by a member of the founding family than when it is run by an officer unrelated to the founder.
Keywords: Management Ownership; Corporate Performance; Tobin's Q
JEL Codes: G30; G32; L22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| management ownership (G32) | Tobin's q (G19) |
| Tobin's q (G19) | management ownership (beyond 20%) (G32) |
| management ownership (5%-20%) (G32) | optimal performance (Tobin's q) (L21) |
| founding family members in management (J54) | performance in older firms (L25) |