Deviations from optimal CEO ownership and firm value

Tong, Zhenxu

doi:10.1016/j.jbankfin.2008.05.005

Cited by 40 publications

(33 citation statements)

References 24 publications

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“…Thus, does firms' profitability decrease if the level of working capital moves away from the optimum point? In order to answer this question, this study follows similar procedure of Tong (2008) and Martinez-Sola et al (2013) by including the residuals of the optimum working capital level regression.…”

Section: Introductionmentioning

confidence: 99%

Working Capital Level Influence on SME Profitability

Afrifa

Padachi

2015

SSRN Journal

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This paper aims to report the results of an investigation of the relationship between working capital level, measured by the cash conversion cycle and profitability of Small and Medium Enterprises (SMEs). The paper employs panel data regression analysis on a sample of 160Alternative Investment Market (AIM) listed SMEs for the period from 2005 to 2010. The empirical results show that there is a concave relationship between working capital level and firm profitability and that there is an optimal working capital level at which firms' profitability is maximised. Furthermore, an examination as to whether or not deviations from the optimal working capital level reduce firm profitability indicate that deviations above or below the optimum decrease profitability. The sample is limited to AIM listed SMEs, and therefore the findings cannot be generalised to all firms. Overall, the evidence suggests that firms should strive and attain the optimal working capital level in order to maximise their profitability. The results are of importance to both SMEs and policy makers providing insight into the nature of cash conversion cycle and its relationship to SMEs profitability.

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Section: Introductionmentioning

confidence: 99%

Working Capital Level Influence on SME Profitability

Afrifa

Padachi

2015

SSRN Journal

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“…The results highlight an incremental contribution of this paper relative to Tong (2008). Tong finds that sales of shares by CEOs demonstrate a pattern consistent with a firm's periodical re-optimization of suboptimal CEO ownership.…”

Section: Introductionmentioning

confidence: 55%

“…They find that the increase in managerial ownership is associated with an increase in corporate performance. Tong (2008) studies the relation between deviations on either side of optimal CEO ownership and firm value. He examines the impact of deviations on Tobin's Q and market reactions around sales and purchases of shares by CEOs, and finds that both above-optimal and below-optimal deviations reduce firm value.…”

Section: Introductionmentioning

confidence: 99%

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Seasoned equity offerings, repurchases, and deviations from optimal CEO ownership

Tong

2010

Finance Research Letters

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“…Current studies are focusing on the relationship of CEO ownership and the firm value (Tong, 2007), performance (McClelland, Barker III & Oh, 2012), institutional ownership (Shin, 2005 We also focus on debt since it's also an effective mean of control. Grossman and Hart (1982) suggest that debt is an incentive for the CEO to adopt effective management and choose the right investment decisions; it limits managerial discretion by reducing access to cash flow.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Does Corporate Governance Matter in Meeting and Beating Analysts’ Forecasts

Maztoul¹

2014

IJBM

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Meeting and beating analysts' forecast has received substantial attention, most of studies investigate two principles problems: the valuation and value relevance of meeting and tools used to achieve benchmarks. This research is different, we investigate whether internal corporate governance impacts on meeting and beating analysts' forecasts and consistently do it, we also examine if these attributes alleviate opportunistic behavior.This paper contributes to the growing literature on earnings benchmarks, it targets to be more specified than previous ones by considering governance attributes without an index. Using a logistic regression models, we document that 'small' institutional investors and incentive compensation incite managers to meet analysts' forecasts contrarily to debt and board activity. We find that consistently meeting is harder to realize and affected by governance attributes. Moreover, results indicate that stock options are associated with opportunistic managerial activities while institutional ownership temperate it.This study is important for investors who must be more attentive about financial signals like meeting analysts' forecasts that may be affected by opportunistic managerial behavior. Furthermore, findings indicate that regulation affect this tendency which reveal the importance of regulators in increasing the transparency of financial market.

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Deviations from optimal CEO ownership and firm value

Cited by 40 publications

References 24 publications

Working Capital Level Influence on SME Profitability

Working Capital Level Influence on SME Profitability

Seasoned equity offerings, repurchases, and deviations from optimal CEO ownership

Does Corporate Governance Matter in Meeting and Beating Analysts’ Forecasts

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