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External monitoring, managerial ownership and firm performance in Malaysian capital market: a GMM based panel data approach

Version 2 2024-06-17, 06:32
Version 1 2014-10-28, 08:35
journal contribution
posted on 2024-06-17, 06:32 authored by Huson Joher Ali Ahmed, IKM Mokhtarul Wadud
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.

History

Journal

Corporate Ownership and Control

Volume

7

Season

Fall

Pagination

131-137

Location

Sumy, Ukraine

ISSN

1727-9232

eISSN

1810-3057

Language

eng

Publication classification

C1 Refereed article in a scholarly journal, C1.1 Refereed article in a scholarly journal

Issue

1

Publisher

Virtus Interpress