Were the Good Old Days That Good? Changes in Managerial Stock Ownership Since the Great Depression


  • Clifford G. Holderness,

    1. Boston College
    Search for more papers by this author
  • Randall S. Kroszner,

    1. University of Chicago
    Search for more papers by this author
  • Dennis P. Sheehan

    1. Pennsylvania State University
    Search for more papers by this author
    • 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, Sunil Wahal, Mark Zenner, Luigi Zingales, three anonymous referees, and participants at seminars at the American Finance Association, European Finance Association, Western Finance Association, American Law and Economics Association, Cliometrics Society, and Economic History Association annual meetings, NBER Summer Institute, Boston College, University of Chicago, UCLA, Washington University (St. Louis), and the Stockholm School of Economics for helpful comments. Holderness acknowledges support from The Wallace E. Carroll School of Management, Boston College, Kroszner from the George J. Stigler Center for the Study of the Economy and the State, Graduate School of Business, University of Chicago, and Sheehan from the Benzak Professorship at the Smeal College of Business, Pennsylvania State University.


We document that ownership by officers and directors of publicly traded firms is on average higher today than earlier in the century. Managerial ownership has risen from 13 percent 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 increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the increase in managerial ownership.