Can managerial stock ownership mitigate agency problems?

Abstract

The objective of this study is to examine whether managerial stock ownership can mitigate the agency problems Specifically I investigate the link between managerial stock ownership (CEO’s stock holdings) and three corporate policies including cash holdings research and development spending (R&D spending) and debt maturity I find that there is a significant and negative relationship between CEO’s stock holdings and the firm’s cash holding Also I find a significant and positive relationship between CEO’s stock holdings and the firm’s R&D spending In addition I document a negative relationship between CEO’s stock holdings and long-term debt These results suggest that managerial stock ownership can be effective in aligning the interests of managers and shareholders and thus mitigating agency problems

Date of Award	2015 Jul 15
Original language	English
Supervisor	Ping-Hsun Huang (Supervisor)