Agency Costs in Small Firms

Résumé

We explore how CEO ownership a¤ects productivity in small and large firms. We use administrative panel data on the universe of limited lia- bility firms in Finland and exploit plausibly exogenous variations to CEO ownership induced by shocks to the CEO spouse's health. We document a substantial increase in productivity when the CEO obtains majority owner- ship or when the majority owner becomes the CEO. While typical samples focus on large public rms, we show that our e¤ects are stronger in medium- sized private firms. Consistently with the quiet life hypothesis, we show that increased ownership boosts CEO's effort at work.

Mots-clés

CEO ownership; firm productivity; SME.;

Codes JEL

G30: General
M12: Personnel Management • Executives; Executive Compensation
D24: Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity
E23: Production
L25: Firm Performance: Size, Diversification, and Scope