Managerial Ownership and Firm Performance in German Small and Medium-Sized Enterprises

Müller, Elisabeth ; Spitz, Alexandra

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URN: urn:nbn:de:bsz:180-madoc-4448
Document Type: Working paper
Year of publication: 2001
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C23 G32 ,
Subject headings (SWD): Deutschland , Führungskraft , Klein- und Mittelbetrieb
Abstract: This paper studies the effect of managerial ownership on performance and the determinants of managerial ownership for small and medium–sized private companies. We use a panel of around 1300 firms in the German business–related service sector for the years 1997–2000. Managerial ownership up to around 80 per cent has a positive impact on firm performance (incentive effect), for higher shares the effect becomes negative (entrenchment effect). Moreover, risk–aversion of managers and signalling of firm quality leads to a non–linear relationship between managerial ownership and the risk exposure of a firm. The determinants of performance and ownership are estimated simultaneously.
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