Association between managerial stock ownership and firm efficiency

Ju Ryum Chung, Moon Kyung Cho, Ho Young Lee

Research output: Contribution to journalArticlepeer-review


This study examines how firm efficiency varies according to managerial ownership. Prior studies on how managerial ownership affects firm value provide inconsistent results. Although firm value is determined by various factors, this study tries to directly link managerial ownership to operating efficiency. It finds evidence consistent with the incentive alignment hypothesis: managerial ownership is positively associated with firm efficiency. It also finds that foreign investors enhance the association between managerial ownership and firm efficiency, whereas an affiliation with large business conglomerates in Korea (chaebols) lowers this association. It contributes to the existing literature by linking managerial ownership to firm efficiency, which we believe is an underlying indicator of the effect of managerial ownership on managers' behaviour in alignment/misalignment with firm value. It also helps interested parties better understand the dynamic roles among management and foreign ownership, and chaebols.

Original languageEnglish
Pages (from-to)378-409
Number of pages32
JournalInternational Journal of Accounting, Auditing and Performance Evaluation
Issue number4
StatePublished - 2019


  • Accounting
  • Chaebol
  • Data envelopment analysis
  • Firm efficiency
  • Foreign shareholder ownership
  • Managerial ownership


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