The Relationship Between Insider Ownership, Firm Value And Firm Investment For The Quoted Firms At The

Abstract

This paper was concerned with establishing whether or not there is any relationship between insider ownership, firm value and firm investment for those firms quoted at the Nairobi Stock Exchange. The study looked at a total of 44 listed firms for the period between 2000 and 2005. Data used for this research has been collected from the quoted firms' financial statements as availed in the Nairobi Stock Exchange database. The data was collected for each variable and analyzed by the regression method using both one equation model and also by a system of simultaneous equations in order to test the relationship. Empirical evidence in this study supports existence of a mutual relationship between the firm value, investments and insider ownership. The study was consistent with previous research by Cho (1998) where by the alignment and entrenchment hypothesis are confirmed.