What determines the allocation of managerial ownership within firms? Evidence from investment management firms

• Main Authors: Dimmock, Stephen G., Gerken, William C., Marietta-Westberg, Jennifer
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2015
• Subjects: DRNTU::Business::Finance::Corporate finance; Manager Ownership; Managerial Ownership
• Online Access: https://hdl.handle.net/10356/79527; http://hdl.handle.net/10220/25039
• Institution: Nanyang Technological University

We show that the allocation of managerial ownership to individuals within firms varies depending upon the joint distribution of decision control and decision management rights. Using a unique dataset of institutional investment management firms, we show that ownership is higher for managers: with both executive and operational responsibilities; when benefits of cooperation are higher; and with large contributions to firm value. Consistent with career concerns, we find increases in a manager's ownership are associated with increases in unsystematic risk. Ownership dispersion within the firm is associated with the allocation of monitoring and operational roles and the potential benefits of cooperation.