TY  - JOUR
AU  - Himmelberg,Charles P.
AU  - Hubbard,R. Glenn
AU  - Palia,Darius
TI  - Understanding the Determinants of Managerial Ownership and the Link Between Ownership and Performance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7209
PY  - 2000
Y2  - February 2000
UR  - http://www.nber.org/papers/w7209
L1  - http://www.nber.org/papers/w7209.pdf
N1  - Author contact info:
Charles Himmelberg
Goldman, Sachs & Co.
Global Investment Research, 22nd floor
200 West Street
New York, NY 10004
Tel: 917-343-3218
E-Mail: charles.himmelberg@gs.com

R. Glenn Hubbard
Graduate School of Business
Columbia University, 101 Uris Hall
3022 Broadway
New York, NY  10027
Tel: 212/854-3493
Fax: 212/864-6184
E-Mail: rgh1@columbia.edu, ws2187@columbia.edu

Darius Palia
Thomas A. Renyi Chair in Banking
Department of Finance & Economics
Rutgers Business School
Room 1142, 1 Washington Park
Newark, NJ 07102
Tel: 973/353-5981
Fax: 973/353-1233
E-Mail: dpalia@rci.rutgers.edu
AB  - Both managerial ownership and performance are endogenously determined by exogenous (and only partly observed) changes in the firm's contracting environment. We extend the cross-sectional results of Demsetz and Lehn (1985) and use panel data to show that managerial ownership is explained by key variables in the contracting environment in ways consistent with the predictions of principal-agent models. A large fraction of the cross-sectional variation in managerial ownership is explained by unobserved firm heterogeneity. Moreover, after controlling both for observed firm characteristics and firm fixed effects, we cannot conclude (econometrically) that changes in managerial ownership affect firm performance.
ER  -