Who´s Minding the Store? Motivating and Monitoring Hired Managers at Small, Closely Held Firms: The Case of Commercial Banks

We test whether the gains from hiring an outside manager exceed the principal-agent costs of owner- manager separation at 266 small, closely held U.S. commercial banks. Our results suggest that hiring an outside manager can improve a bank´s profit efficiency, but that these gains depend on aligning the hired managers with owners via managerial shareholdings. We ..