Relationship between ownership structure, investment and corporate Essay

kind among self-command structure, investment and corporate cheer - Essay Examplef such literary productions talks about the relationship between managerial ownership levels, the direct investment decisions made by management and the natural value of the firm.Moreover, there were many arguing studies done in almost the analogous year from different authors and researchers. Just like Morck, Shleifer and Vishny (1988), McConnell and Servaes (1990), and Hermalin and Weisbach (1991) provide facts and verification of a significant non-linear relationship between corporate value and managerial ownership. They argue that corporate value increases with management equity holdings to a occurrence level after which entrenchment behavior becomes dominant, resulting into a decrease in firm value. Out of the cardinal studies, it was still McConnell and Servaes (1990) that have reported no change in the relationship between corporate value and managerial holdings at certain high levels of equity ownership.However, such earlier findings were found to formulate doubts when compared to working of Cho (1998) and Himmelberg, Hubbard and Palia (1999). Cho (1998) showed that managerial ownership had no effect on corporate value and investment but the only the corporate value that had a considerable impact on managerial ownership through the practical application of a two-stage least squares methodology.One must choose an ownership structure prior to starting a business. It may come into varying types of ownership whether sole proprietorship, partnership, corporation (for-profit and nonprofit), cooperative, or limited liability gild (LLC). Although these types are being utilized by many businesses, there is no one preference that fits for each business. This is for the reason that each of these ownership structures has its certain advantages and disadvantages in a business and thus the choice of ownership structure depends on the form that would best suit and meet its ne eds. In saying so, there would be a need for a careful evaluation of the most important considerations in