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THE NON-LINEAR RELATIONSHIP BETWEEN MANAGERIAL OWNERSHIP AND FIRM PERFORMANCE
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Damiano Bonardo, Stefano Paleari 
, Silvio Vismara
Abstract
We investigate the relationship between operating performance and ownership structure using a sample of Italian IPO-firms in the period 1995-1999. Overall, we find that their performance declines after the IPO. We find evidence of a non-linear relationship between ownership and performance using different measures of operating performance and managerial ownership. This result supports the hypothesis of a combined effect of ownership on firm performance, with a positive effect at low and high levels of managerial ownership (alignment of interest hypothesis) and a negative effect at intermediate levels (entrenchment hypothesis).
Keywords: Ownership Structure, Performance, Corporate Governance, Initial Public Offerings
How to cite this paper: Bonardo, D., Paleari, S., & Vismara, S. (2007). The non-linear relationship between managerial ownership and firm performance. Corporate Ownership & Control, 4(4), 89-101. https://doi.org/10.22495/cocv4i4p7
