Finance

The agency literature in corporate finance rests for the most part on the assumption that highly diffuse ownership is commonplace and managerial ownership small; the result is costly for shareholders. Evidence provided here is to the contrary. Even where ownership is dispersed, managerial ownership is often significant and the mean and ownership statistics are surprisingly large. Furthermore, there is not strong consistent relation, linear or non-linear, between ownership and valuation or profit. These relations vary greatly over time. These findings support Demsetz and Lehn (1985) and contradict the agency arguments in Jensen and Meckling (1976), Morck, Shleifer, and Vishny (1988) and McConnell and Servaes (1990).