English, Article, Journal or magazine article edition: Moral Hazard and Dynamics of Insider Ownership Stakes Branko Urosevic

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Moral Hazard and Dynamics of Insider Ownership Stakes
Author
  • Branko Urosevic
Physical Description
  • preprint
Notes
  • In this paper, I analyze the ownership dynamics of N strategic risk-averse corporate insiders facing a moral hazard problem. A solution for the equilibrium share price and the dynamics of the aggregate insider stake is obtained in two cases: when agents can credibly commit to an optimal ownership policy and when they cannot commit (time-consistent case). In the latter case, the aggregate stake gradually adjusts towards the competitive allocation. The speed of adjustment increases with N when outside investors are risk-averse, and does not depend on it when investors are risk-neutral. Predictions of the model are consistent with recent empirical findings.
  • Corporate insiders, moral hazard, ownership dynamics
  • RePEc:upf:upfgen:787
Language
  • English
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