Were The Good Old Days That Good?

eTHE JOURNAL OF FINANCE VOL. LIV, NO. 2 APRIL 1999

Were the Good rare Days That Good? Changes in managerial Stock monomania Since the Great Depression
CLIFFORD G. HOLDERNESS, RANDALL S. KROSZNER, and DENNIS P. SHEEHAN* ABSTRACT
We document that willpower by officers and directors of in the public eye(predicate)ly traded firms is on average higher today than earlier in the century. Managerial will power has risen from 13 portion for the universe of exchange-listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the outgrowth and explore hypotheses to explain it. Higher managerial ownership has non substituted for alternative corporate governance mechanisms. Lower volatility and great hedging opportunities associated with the development of financial markets appear to be grievous factors explaining the increase in managerial ownership.

THE SEPARATION OF OWNERSHIP AND watch of firms has generated an enormous literature since the publication of Berle and Means The Modern mint and Private Property ~1932!. In both academic and public policy circles, there has been much debate about the consequences of absentee ownership ~Veblen ~1923!! and what policies should be undertaken to remedy the situation.



Berle and Means warn that the separation of ownership and control destroys the very foundation on which the economic establish of the past three centuries has rested and assert that the @d#ispersion in the ownership of separate enterprises . . . has already proceeded far, it is rapidly increasing, and appears to be an ineluctable development of the modern cor-

* Holderness is from Boston College, Kroszner is from the University of Chicago, and Sheehan is from Pennsylvania State University. We thank Cynthia Alexander, Harold Demsetz, Franklin Edwards, Laura Field, Wayne Guay, Charles Hadlock, Gordon Hanka, Kenneth Lehn, Claudio Loderer, Hamid Mehran, Peter Tufano, René Stulz, Robert Vishny,...If you want to get a full essay, set out it on our website: Orderessay



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