Managerial ownership and firm value: Evidence from New Zealand

Abstract

The relationship between managerial ownership and firm value is examined for 79 listed companies in New Zealand Consistent with theoretical prediction in Jensen and Meckling (1976), ownership and firm value are positively related for ownership levels below 16% and above 58%. Results consistent with Demsetz (1983) were obtained for all other levels of ownership suggesting entrenchment and hence value loss. Our findings provide further support to existing evidence from the U.S. and the U.K. that managerial ownership and firm value have a nonlinear relationship.