Title: Director shareownership and corporate performance in South Africa

Authors: Collins G. Ntim

Addresses: Accounting and Finance, Adam Smith Business School, University of Glasgow, West Quadrangle, Gilbert Scott Building, Glasgow, G12 8QQ, UK

Abstract: This paper investigates the relationship between director shareownership and corporate performance in South Africa using a sample of 169 listed firms from 2002 to 2007. Our results suggest a statistically significant and positive association between director shareownership and corporate performance. By contrast, we find no evidence of a non-linear effect of director shareownership on corporate performance. Our findings are robust across a raft of econometric models that control for different types of endogeneity problems and corporate performance proxies. Overall, our results provide support for agency theory, which suggests that director shareownership can reduce agency problems by aligning more closely the interests of shareholders and corporate executives, and thereby improving corporate performance.

Keywords: corporate governance; corporate performance; South Africa; director shareownership; DOWN; endogeneity; firm performance; econometrics; agency theory; shareholders; corporate executives.

DOI: 10.1504/AJAAF.2012.052137

African Journal of Accounting, Auditing and Finance, 2012 Vol.1 No.4, pp.359 - 373

Available online: 16 Feb 2013 *

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