Why Managers Hold Shares of Their Firms: An Empirical Analysis

not control for. However, given that we find no abnormal returns in firms
with the very characteristics of firms with high managerial ownership that
have no owner CEO, and given that CEO individual risk is idiosyncratic,
this explanation seems to be less likely. Rather, the abnormal returns might
either be an indication that markets are not fully informationally efficient,
or they might emerge as compensation for managerial effort in a rational
equilibrium (von Lilienfeld-Toal (2006) and Blonski and von Lilienfeld-Toal
(2006)). Depending on whether we assume investors to be very rational in a
strategic sense, or whether we assume them to be of limited rationality in the
sense of being unable to correctly interpret publicly available information,
one or the other explanation seems to be more likely. Other potential expla-
nations for abnormal returns of owner CEO firms, like limits to arbitrage or
liquidity concerns, appear to be less likely.

29

<<   29   30   31   32   33   34   35   >>

More intriguing information