External monitoring, managerial ownership and form performance in Malaysian capital market: a GMM based panel data approach
Ali Ahmed, Huson Joher and Wadud, Ikm Mokhtarul 2009, External monitoring, managerial ownership and form performance in Malaysian capital market: a GMM based panel data approach, Corporate ownership & control, vol. 7, no. 1, Fall, pp. 131-137.
This study re-examines whether the structure of share ownership by both directors and institutional ownership provides explanation for firm performances. These relationships are modelled and estimated using GMM based dynamic panel data over a period from 1997 to 2001 with a sample of 100 CI components companies listed on Main Board of Malaysia. The findings provide strong evidence of simultaneity between firm performance and managerial ownership. Although an insignificant relationship between firm performance and institutional ownership is~ observed, the institutional holdings provide strong substitute for managerial ownership with a strong negative relationship between managerial ownership and institutional ownership. This is in line with the managerial incentive hypothesis, which suggests that manager's share in the firm's ownership leads to better performance and the monitoring substitute hypothesis, which suggests that managerial ownership could be effectively replaced by institutional ownership.
Field of Research
140209 Industry Economics and Industrial Organisation
Socio Economic Objective
910401 Industrial Relations
HERDC Research category
C1 Refereed article in a scholarly journal
HERDC collection year
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