Insider ownership and corporate performance: evidence from Germany

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Evidence from Germany AbstractIn this paper we address the question whether insider ownership affects corporate performance. Evidence coming from studies dealing with Anglo-Saxon countries is rather inconclusive, especially because it seems that results are significantly affected by endogeneity. Economically, this is due to the fact that in these countries insider ownership seems to be mainly driven by management's compensation contracts. We argue that Germany is different in this regard, as insider ownership often is related to family control, stock-based compensation is less widespread and the market for corporate control is less developed.Starting from this presumption our data allows to make an unbiased observation as to whether insider ownership affects firm performance. Using a pooled data set of 648 firm observations for the years 2003 and 1998 we find evidence for a positive and significant relationship between corporate performance -as measured by stock price performance, market-to-book ratio and return on assets -and insider ownership. This relationship seems to be rather robust, even if we account for endogeneity by applying a 2SLS regression approach. Moreover, we also find outside block ownership as well as more concentrated insider ownership to have a positive impact on corporate performance. Overall the results indicate that ownership structure might be an important variable explaining the long term value creation in the corporate sector. JEL classification:G32

Ownership participation of cross-border mergers and acquisitions by emerging market firms

“…This finding is valuable to the growing literature on the relationship between corporate governance and firm performance (e.g. Aggarwal and Samwick, 2006;Gottesman et al, 2009;Kaserer and Moldenhauer, 2008) because it further reveals how ownership participation serves to clarify the nature of the relationship between corporate governance and the market value of the acquiring firm.…”

The German Entrepreneurial Index (GEX®) - A Primer on an Ownership-Based Style Index in Germany

“…In addition, the aspect whether endogeneity between shareholder structure and corporate performance affects the results is again addressed in the cited studies to a different degree. 13 Kaserer/Moldenhauer (2008). 14 This finding is also supported by two studies focussing on newly listed firms: Ehrhardt/Nowak (2003), p. 229, show that the average rate of return over a period of 36 months after the IPO is 6.5% for companies in which the family still controls 25% to 75% of the voting rights.…”

“…12 As Kaserer/Moldenhauer (2008) have shown there exists a relationship between owner dominance and performance in Germany. 13 Overall, it is likely that notable insider ownership has positive effects on corporate performance.…”

Internal Governance Mechanisms and Firm Performance: The Case of Vietnam

“…In US, Anderson and Reeb (2003) found that family ownership presents in one-third of the S&P 500 firms. Many literatures also investigate into the effects of family-control (Kaserer & Moldenhauer, 2005). Family ownership could be considered as insider ownership as family businesses traditionally attracted a lot of attention given their predominant economic role (Kaserer & Moldenhauer, 2005).…”