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Director Shareownership and Corporate Performance in South Africa

Publication Date
  • G32 - Financing Policy
  • Financial Risk And Risk Management
  • Capital And Ownership Structure
  • Value Of Firms
  • Goodwill
  • G34 - Mergers
  • Acquisitions
  • Restructuring
  • Corporate Governance
  • G38 - Government Policy And Regulation
  • Law


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.

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