Managerial share ownership and operating performance : do independent and executive directors have different incentives?

Khan, Arifur, Mather, Paul and Balachandran, Balasingham 2014, Managerial share ownership and operating performance : do independent and executive directors have different incentives?, Australian journal of management, vol. 39, no. 1, pp. 47-71.

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Title Managerial share ownership and operating performance : do independent and executive directors have different incentives?
Author(s) Khan, Arifur
Mather, Paul
Balachandran, Balasingham
Journal name Australian journal of management
Volume number 39
Issue number 1
Start page 47
End page 71
Total pages 25
Publisher Sage Publications
Place of publication London, England
Publication date 2014-02
ISSN 0312-8962
1327-2020
Keyword(s) entrenchment
incentive alignment
managerial share
ownership
performance
Summary We investigate the relationship between managerial share ownership (MSO) and earnings as a measure of operating performance in Australia. To mitigate potential earnings management, we also use discretionary accrual adjusted earnings as an alternative measure of performance. We document a negative relation between MSO and performance followed by a positive relation. We suggest that these unique results are an artefact of certain Australian institutional features and imply that the ownership–performance relation is context-specific, with the wider corporate governance systems influencing the theorised incentive effects. We also posit that executive directors and independent directors have different ownership–performance incentives. Our results are consistent with this proposition and suggest that independent directors may be immune to the theorised incentive alignment or entrenchment effects associated with share ownership.
Language eng
Field of Research 150103 Financial Accounting
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2012, Sage Publishing
Persistent URL http://hdl.handle.net/10536/DRO/DU:30049995

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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