The Impact of Insiders' Ownership on the Market Performance of a Company in the Emerging Markets: Adjusting the Model of Morck, Shleifer, Vishny to Present-day Circumstances

The thesis concerns itself with an analysis of the impact of insiders’ ownership on the market performance of a company in the emerging markets - namely, in the markets of BRIC-countries - for the period between 2003 and 2013. The study is based on the research of Morck, Shleifer and Vishny (1988) and also takes into account specific features of developing markets. The adjusted model has been tested on a sample of 97 non-financial companies of Brazil, Russia, India and China in two functional specifications: cubic and piece-linear. As a result, significant non-monotonous relation has been derived: the market performance happened to increase on low and high levels of insiders' ownership (due to the convergence-of-interest effect) and happened to fall on average levels of it (due to the entrenchment effect). The range of an active entrenchment effect happened to be between 23,2% and 61,3% of shares in hands of insiders. Apart from that, there has been considered the impact of the world financial crisis of 2008-2009 on the connection between the insiders' ownership and the market performance of a company.