MANAGERIAL HEDGE (EFFORT) INCENTIVE, OWNERSHIP AND FIRM PERFORMANCE: EVIDENCE FROM FOUNDER-CEOS AND NON FOUNDER-CEOSDownload This Article
This paper tries to test three different hypotheses for the relationship between firm performance and characteristics of founder-CEOs and non founder-CEOs using three econometric techniques: OLS, feasible GLS and piecewise linear regression. They are risk-averse hypothesis, ownership hypothesis and hedge (effort) incentive hypothesis. Firm performance increases as hedge (effort) incentive increases. Founder-CEOs’ ownership has positive effect on firm performance when their ownership is between five percent and twenty percent. This is consistent with ownership hypothesis. The risk aversion level of founder-CEOs is negatively correlated with firm performance which is consistent with risk-averse hypothesis. The ownership and risk-averse level of non founder-CEOs are not statistically correlated with firm performance.
Keywords: Ownership, Firm Performance, Founder-CEOs, Non Founder-Ceos
How to cite this paper: Kim, H. (2007). Managerial hedge (effort) incentive, ownership and firm performance: Evidence from founder-CEOs and non founder-CEOs. Corporate Ownership & Control, 4(3), 71-79. http://dx.doi.org/10.22495/cocv4i3p6