Directors' Stock Ownership and Organizational Performance: An Investigation of Fortune 500 Companies
- 4 September 1987
- journal article
- Published by SAGE Publications in Journal of Management
- Vol. 13 (3), 499-508
- https://doi.org/10.1177/014920638701300306
Abstract
Advocates in favor of boardroom reform have often suggested that when personalfinancial risk is involved, directors will take a more active role in organizational decision-making, and this, in turn, will lead to increased organizationalperformance. Although intuitively appealing, the notion offinancial dependence by board members has never before been empirically tested. This study examines the relationship between a director's stockholdings andfirm performance using a sample of 250 of the Fortune 500 companies. The financial dependence perspective is supported in part by the research findings.Keywords
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