Ownership Structure, Financial Policy and Performance of the Firm: US Evidence

Nejla Ould Daoud Ellili

Abstract


The objective of this article is to determine the interrelations between the ownership structure and the financial
policy as well as the relationship between the managerial ownership and the performance of the firm. This study
examines the relationship between the ownership structure and the performance when the managerial ownership
is modeled as en endogenous variable. The regressions results show that all the shareholders regardless their
types (manager, blockholder or institutional) do not tend to hold substantial ownership in the high levered firms
because of the high bankruptcy risk. The non linear relationship between the managerial ownership and the
performance of the firm strengthens the earlier US studies showing that some levels of the managerial ownership
are not beneficial to the shareholders’ wealth. The results of the simultaneous equations show that the entrenched
managers avoid the debt in order to escape the performance pressure and to protect their non diversifiable human
capital.


Full Text: PDF DOI: 10.5539/ijbm.v6n10p80

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Business and Management   ISSN 1833-3850 (Print)   ISSN 1833-8119 (Online)

Copyright © Canadian Center of Science and Education

To make sure that you can receive messages from us, please add the 'ccsenet.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.