The effect of changes in ownership structure on performance: Evidence fromthe thrift industry

Restrictions on stock ownership may harm a company's performance, because r estrictions prevent owners from choosing an optimal structure. We examine t he stock-price performance and ownership structure of a sample of thrift in stitutions that converted from mutual to stock ownership. We find that afte r conversion and the expiration of ownership-structure restrictions, firm p erformance improves significantly, and the portions of the firm owned by ma nagers and the firm's employee stock ownership plan increase. Changes in pe rformance are positively associated with changes in ownership by managers, but negatively associated with changes in ownership by employee stock owner ship plans. (C) 1998 Elsevier Science S.A. All rights reserved. JEL classif ication: G21; G28; C32; G38.