Publication Date

September 1996


Agency theory is used to develop hypotheses regarding the effects of ownership proliferation on firm performance. We examine the effects of CEO ownership, executive team ownership, and all employee ownership, in addition to the moderating effect of risk, on firm survival and stock price. Firms with low CEO ownership outperform those with high levels of CEO ownership across all levels of risk, but the effect is most pronounced for low risk firms. Executive team ownership is negatively related to firm performance, while ownership for all employees is positively associated with firm performance particularly for higher risk firms.


Suggested Citation
Welbourne, T. M. & Cyr, L. A. (1996). Using ownership as an incentive: Does the "too many chiefs" rule apply in entrepreneurial firms? (CAHRS Working Paper #96-14). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies.

***Working Paper Redone October 1998