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Insider ownership and market valuation in South Africa: uncovering the effects of shareholdings by different groups of corporate insiders

Ntim, Collins G. (2012) Insider ownership and market valuation in South Africa: uncovering the effects of shareholdings by different groups of corporate insiders , Southampton, GB University of Southampton

Record type: Monograph (Working Paper)

Abstract

Purpose: This paper examines the connection between shareholdings by different groups of corporate insiders and market valuation in South Africa using a sample of 169 listed corporations from 2002 to 2007.

Design/methodology/approach: We distinctively employ fixed-effects and two-stage least squares regressions to uniquely examine the effect of shareholdings by employees, chief executive officers, chief financial officers, other executive directors and non-executive directors on market valuation.

Findings: We find that aggregate ownership by all corporate insiders have a positive effect on market valuation. However, when we examine the link between ownership by individual groups of corporate insiders and market valuation, our results suggest that firms with higher ownership by chief executive officers and other executive directors have lower market valuation, but we do not find any evidence that ownership by chief financial officers has any significant effect on market valuation. In contrast, we find that ownership by employees and non-executive directors has a positive effect on market valuation.

Originality/value: Past studies have mostly examined the association between aggregate insider ownership and market valuation. By contrast, there is an acute dearth of evidence on how ownership by different insider groups influences market valuation. Our evidence contributes to the literature by providing evidence on how ownership by different insider groups affects market evaluation. We also innovatively apply a number of econometric models that sufficiently address different types of endogeneities and market valuation measures.

Article type: Research paper

Microsoft Word __filestore.soton.ac.uk_users_cgn1n11_mydesktop_Huddersfield - Laptop_Collins Ntim - Complete_Desktop_All Articles and Papers_COC_IJBGE REVISION_International Journal of Business Governance and Ethics 2013.doc - Accepted Manuscript
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More information

Published date: 9 August 2012
Organisations: Centre of Excellence in Decision, Analytics & Risk Research, Accounting

Identifiers

Local EPrints ID: 343637
URI: http://eprints.soton.ac.uk/id/eprint/343637
PURE UUID: 178a530e-8281-4e31-8719-2cba94c7bad3

Catalogue record

Date deposited: 09 Oct 2012 15:17
Last modified: 18 Jul 2017 05:21

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