Aligning Boards of Directors with Shareholers: Is Equity Ownership an Effective Mechanism?

摘要

Does equity ownership by outside members of a board of directors better align the board with shareholder interests? This study examiens the use of equity ownership within 94 Fortune 500 companies and the effects of equity ownership on firm performance, as measured by the presence or absence of indices of shareholder satisfaction. The findings suggest that equity ownership is an effective monitoring mechanism when shareholder (dis) satisfaction is measured by the filing of shareholder lawsuits and shareholder proposals.