Managerial ownership, board monitoring and firm performance in a family-concentrated corporate environment

Peter CHENG, Lixin, Nancy SU, Xindong,Kevin ZHU

Research output: Journal PublicationsJournal Article (refereed)

20 Citations (Scopus)


Using data from Hong Kong, a market that has family-concentrated ownership structure, we examine the relation between managerial ownership, the board of directors and firm performance. We first conduct analysis on the managerial ownership and firm performance to derive the turning points where either 'convergence of interest' or 'entrenchment' effect of managerial ownership is dominant. Based on these estimated turning points, we find that at low and high level of ownership, effective board mitigates the entrenchment effect associated with managerial ownership; at medium level of ownership, board effectiveness is less demanded. These findings suggest that managerial ownership and board monitoring are substitutes in mitigating the agency problem between managers and shareholders. We also find that effective board curbs the excessive compensation by entrenched managers to themselves at low level of managerial ownership.
Original languageEnglish
Pages (from-to)1061-1081
Number of pages21
JournalAccounting and Finance
Issue number4
Publication statusPublished - 1 Jan 2012
Externally publishedYes



  • Board of directors
  • Family concentration
  • Firm performance
  • Managerial compensation
  • Managerial ownership

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