OWNER-MANAGERS’ EQUITY PORTFOLIO CHOICE

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Abstract

Some studies have shown that managers concentrate large fractions of their wealth in the equity of their own firm. In this paper we use a unique dataset and investigate how Swedish owner-managers invest remaining wealth conditional on a major investment in their own firm. We find no evidence that owner-managers seek diversification benefits when they invest remaining wealth. Instead some owner-managers invest remaining wealth in the industry where they already have a substantial capital investment. We conclude that some owner-managers seek to exploit their industry-specific superior information when they invest wealth not tied up in their own firms

Keywords: Portfolio choice, Under-diversification, Owner-managers

How to cite this paper: Holmen, M., & Råsbrant, J. (2006). Owner-managers’ equity portfolio choice. Corporate Ownership & Control, 4(1), 37-48. https://doi.org/10.22495/cocv4i1p3