- Executive Equity Ownership (PowerPoint)
In theory:
- Executives who hold equity in the companies they manage have greater incentive to build economic value.
- Equity ownership should discourage self-interested behavior.
- Actions that impair firm value would inflict corresponding damage to the executive’s personal wealth.
- As such, equity ownership is expected to mitigate agency problems.
Tags: corporate governance educational and teaching material, equity incentives executive wealth, equity ownership