Board Ownership and Stock Market Returns - A study on the relationship between ownership structure and firm performance
Sammanfattning: Our study examines whether firms in which the board of directors has high ownership perform better than firms in which the board of directors has low or no ownership. To measure firm performance, we take an investor's perspective and study stock price returns and use Fama-French-Carhart's Four Factors Model to test our hypothesis. We use a data set consisting of ownership and stock price data from all Large Cap and Mid Cap companies on the Stockholm Stock Exchange between 2016-2020. Conclusively, we find that firms in which the board of directors had high ownership yielded higher average annual and monthly returns during the 5-year time period (2016-2020) than firms in which the board of directors had low or no ownership. However, the abnormal returns are economically but not statistically significant. Therefore, we cannot ascertain or verify that such a relationship between board ownership and firm performance prevails and are unable to draw conclusions regarding our hypothesis.
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