NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Were the Good Old Days That Good? Changes in Managerial Stock Ownership Since the Great Depression

Clifford G. Holderness, Randall S. Kroszner, Dennis P. Sheehan

NBER Working Paper No. 6550
Issued in May 1998
NBER Program(s):   DAE   CF

We document that ownership by officers and directors of publicly-traded firms is on average higher today than earlier in the century. Managerial ownership rises from 13 percent for the universe of exchange-listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the increase in managerial ownership.

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Published: Journal of Finance (April 1999): 435-469.

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