Corporate performance, managerial ownership and endogeneity: A simultaneous equations analysis for the Athens stock exchange

This paper investigates the relationship between managerial ownership and firm performance by considering the endogenous nature of the ownership variables. We conducted our analysis by applying a simultaneous equations framework. We empirically controlled the direction and significance of this relationship, using a panel comprised of 146 firms quoted on the Athens Stock Exchange between 2000 and 2004. The main findings of our analysis indicated that when managerial ownership is treated as endogenous, there is a positive impact on corporate value. Given the particularly high degree of managerial ownership that is observed in the firms listed in the Athens Stock Exchange, we argue that the estimated positive relationship can be mainly explained by the existing high levels of managerial ownership.