Interdependence between Managerial Ownership, Leverage and Firm Value: Theory and Empirical Validation
<p>This paper test the interdependence between managerial ownership, debt and firm value. To this end, we examined a sample of 246 French firms over a period of 11 years is built. In addition, we use two estimation methods: simultaneous equations and data panels methods. The empirical results support the interaction between these three variables. We concluded a nonlinear relationship between insider ownership and shareholder wealth. An inverse U-shaped relationship was found between debt and managerial ownership. However, an increase in debt leads to an increase in managerial ownership. Moreover, the share capital held by managers is a significant factor in explaining debt ratio of French firms. Finally, we conclude that the disciplinary role of debt is valid only for the data panels method.</p><p>al Jordanian firms listed at Amman Stock Exchange (ASE) for the period of 2005-2013, by applying panel data regression analysis. It depends on building three OLS models: Pooled, Fixed Effects Model and Random Effects Model. In addition, a test for Breusch and Pagan Lagrangian multiplier (LM), and Hausamn test to choose among the three models which model is most suitable for our data. A main finding of the panel data analysis is that; fixed effect regression is the most convenient model. As a result, there is no strong evidence that there is a relationship between both institutional ownership and firm performance for Jordanian listed firms. This conclusion can be due to the fact that institutional ownership has its own pros and cons, therefore, their existence and influence could affect materially the types and risk level of investment decisions taken by the management which in return will affect the firm’s performance as a whole. ociation with external reserve and net credit to the economy. Based on these results; it is recommended that, the Nigeria government should designed programmes and incentives to boost industrial capacity utilization in the country. Markets determine nominal exchange rate should prevail in the economy. The country should regulate its foreign reserve policy by setting a threshold, above which excess deposit should be plough back to the domestic economy inform of investments rather than support excessive importation.</p><p> </p>