Managerial Ownership and Company Performance in German Small and Medium-Sized Private Enterprises |
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Authors: | Elisabeth Mueller Alexandra Spitz-Oener |
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Institution: | Centre for European Economic Research, Mannheim ; Humboldt University, Berlin |
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Abstract: | Abstract. We analyse the relationship between managerial ownership and company performance, testing the incentive and entrenchment hypothesis. Differently from previous literature, we focus on small and medium-sized private enterprises which constitute an important part of the German economy. We use a panel of 356 companies in the German business-related service sector for the years 1997–2000. Our findings are that performance, measured by survey-based profit information, is increasing in managerial ownership by up to around 40 per cent. We do not find a significant entrenchment effect, possibly because, at levels at which managers could become entrenched, they already bear a large proportion of the costs and have therefore an incentive to maximize company value. |
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Keywords: | G32 |
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