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This workshop examines the consequences of deviations from optimal CEO ownership. While managerial ownership helps align the incentives between managers and shareholders, excessive managerial ownership imposes more costs of sub-optimal diversification on the manager side and induces other drawbacks. Economists have hypothesized that there is an optimal level of managerial ownership for a firm. However, managerial ownership may not always stay at the optimum because of the transaction costs needed to adjust ownership. As a result, the actual managerial ownership can deviate from the optimal level.

We focus on CEO ownership and address the following questions given the existence of deviations from optimal CEO ownership. What is the relation between the deviations and firm value? Are the purchases and sales of shares by CEOs affected by the deviations and how does the market react to these events? Do the deviations have further impacts on a firm's financial policies? Can we establish a link between ownership structure and capital structure through the deviations? In this workshop, we will present the findings to stimulate a discussion about the consequences of deviations from optimal CEO ownership and the ways to re-optimize the ownership.

Zhenxu Tong joined the Xfi Centre for Finance and Investment at the University of Exeter in September 2006 as Lecturer in Finance. He studied at Fudan University and obtained his BA in International Finance in 2000. He completed his PhD in Finance at INSEAD in 2006. His research interests include corporate finance, corporate governance, and behavioral finance.