Arbeitspapier

Insider Ownership and Investment Efficiency

Agency problems in firms are known to influence suboptimal capital investment decisions. Using panel data of publicly listed firms in India, we find evidence that increased insider ownership is associated with lower investment efficiency, i.e. as insider ownership increases, firms show tendency to make capital investments beyond the optimal level. However, we do not find evidence of increased insider ownership leading to underinvestment (below the optimal level of capital investment). A plausible explanation, consistent with theory, is that such insiders are making capital investments for private gain and empire-building rather than in the best interest of the firm. Additional analyses show that the presence of independent directors on the board of firms mitigates such value-destroying investments stemming from increased insider ownership.

Sprache
Englisch

Erschienen in
Series: QMS Research Paper ; No. 2020/13

Klassifikation
Wirtschaft
Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Thema
Investment efficiency
Tobin's Q
insider ownership
suboptimal investment
overinvestment

Ereignis
Geistige Schöpfung
(wer)
Bhatta, Bibek
Ereignis
Veröffentlichung
(wer)
Queen's University Belfast, Queen's Management School
(wo)
Belfast
(wann)
2020

DOI
doi:10.2139/ssrn.3744165
Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Bhatta, Bibek
  • Queen's University Belfast, Queen's Management School

Entstanden

  • 2020

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