LAWRENCEVILLE, NJ -- Dr. David Y. Suk (left) of Lawrenceville, associate professor of finance at Rider University, is on paid research leave for the fall semester to examine the issue of the relationship between insider ownership and firm performance.

A member of the Rider finance faculty since 1990, Dr. Suk specifically wants to answer the question: Do insiders use their privileged information to trade their company's stock for their own benefit? He says there are two competing hypotheses on this issue.

First, as managers' equity ownership increases, their interests coincide more closely with those of outside shareholders and hence the conflicts between managers and shareholders are likely to be minimized. Therefore, management's equity ownership helps resolve the agency problems and improve the firm's performance. Second, several studies suggest the possibility that managers who own enough stock to dominate the board of directors could expropriate corporate wealth. In this case management's ownership does not always have a positive effect on corporate performance.

This research will develop a simple model within the framework of asset pricing models to describe the effect of insider ownership on shareholders' wealth. Previous studies focused only on the U.S. He will extend the study to include Japan, Canada, France, Italy, the United Kingdom, and Germany.

His research will be co-authored with Dr. Ki C. Han of Suffolk University in Boston. They plan to submit the paper to major finance conferences for presentation.

Dr. Suk received his Ph.D. and M.A. degrees in finance from Ohio State University and B.A. degree in business from Sogang University in Seoul, Korea.

Rider University is an independent, coeducational, nonsectarian institution with a 353-acre campus in Lawrenceville, NJ, and a 23-acre campus in Princeton, NJ. The University offers 58 undergraduate programs and 15 graduate programs in business, liberal arts, science, education, and music. Ninety-five percent of Rider's faculty members hold doctoral or other appropriate terminal degrees. U.S. News and World Report has again ranked Rider in the top tier of northern universities based on the quality of its programs.