A Meta-analysis of the Effects of Executive and Institutional Ownership on Firm Performance

Increased executive ownership and institutional investment, hailed in the 1980s as positive governance trends, are drawing sharp criticism in the wake of recent corporate scandals. Scholars have argued that these ownership mechanisms should have positive governance effects, yet extant empirical evid...

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Bibliographic Details
Published inJournal of managerial issues Vol. 17; no. 4; pp. 494 - 510
Main Authors Sundaramurthy, Chamu, Rhoades, Dawna L., Rechner, Paula L.
Format Journal Article
LanguageEnglish
Published Pittsburg Pittsburg State University 01.12.2005
Pittsburg State University, Department of Economics
Subjects
Business management
Business ownership
Business structures
Chief executive officers
Corporate governance
Corporate strategies
Correlation analysis
Donations
Effects
Efficiency
Equity
Executive compensation
Executives
Hypotheses
Institutional investments
Investment strategies
Investors
Meta-analysis
Ownership changes
Pension funds
Shareholders
Stock ownership
Stockholders
Studies
Systematic review
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Summary:Increased executive ownership and institutional investment, hailed in the 1980s as positive governance trends, are drawing sharp criticism in the wake of recent corporate scandals. Scholars have argued that these ownership mechanisms should have positive governance effects, yet extant empirical evidence regarding the impact of executive and institutional ownership is quite mixed. We integrate these equivocal findings regarding the relationships between executive and institutional stock ownership and firm performance using metaanalysis, a quantitative analytical technique. Our results indicate that there is no substantive association between executive and institutional ownership and firm performance. We also control for the moderating influence of firm performance measures, stock ownership measures as well as the level and type of executive ownership and find no significant effects. These findings suggest that advocates and detractors of executive and institutional ownership trends need to exercise caution in their conclusions. Further understanding of the subtleties of ownership and its potential links to other governance mechanisms and organizational performance is warranted.
ISSN:1045-3695
2328-7470