Abstract
Using a sample of firms listed on the Chinese stock markets from 2003 to 2012, this paper investigates the impact of managerial shareholding on corporate investment decisions and the equity valuation of the growth/adaptation options from the perspective of the real options-based valuation theory. In addition, it examines whether the relationship between managerial shareholding and corporate investment and equity valuation varies with the type of ownership. The empirical results indicate that managerial shareholding can enhance the flexibility of management investment, increasing the equity value attributable to the growth and adaptation options. Further analyses show that such effects are found primarily in private firms.
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CLC Codes: F275.5, F276.6
We acknowledge financial support from the National Natural Science Foundation of China (71072036, 71272012, and 71472114), the Shu Guang Project of Shanghai (11SG35), and the Program for IRTSHUFE. We thank the anonymous reviewer for his/her helpful comments. Any errors and omissions are our own.
1 Qingchuan Hou, Associate Professor, Institute of Accounting and Finance, Shanghai University of Finance and Economics. Corresponding Author: Qinglu Jin, Professor, Institute of Accounting and Finance, Shanghai University of Finance and Economics; email address: acjql@mail.shufe.edu.cn. Peipei Zhang, School of Accountancy, Shanghai University of Finance and Economics. Man Zhang, School of Accountancy, Shanghai University of Finance and Economics.
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Hou, Q., Jin, Q., Zhang, P. et al. Managerial Shareholding, Investment Flexibility, and Equity Valuation *. China Account Financ Rev 17, 3 (2015). https://doi.org/10.7603/s40570-015-0003-0
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DOI: https://doi.org/10.7603/s40570-015-0003-0