What should be the insiders own percentage for a good company

Insider ownership percentage for a good company can vary and is not universally fixed, but research suggests that a moderate level of insider ownership can be beneficial. Here are some insights:

1. Optimal Level: According to a study by WKA Cheung (2006), in a model specification without adjustment costs, insider ownership is significantly positively associated with corporate performance. However, the effectiveness of insider ownership diminishes when it reaches very high levels. Another study by H. Servaes (1990) shows that the value of the firm first increases with managerial equity ownership, then decreases as ownership increases further. This suggests that an optimal level of insider ownership exists, likely between a minimum and a maximum threshold.
2. Contextual Factors: The impact of insider ownership on firm performance can be influenced by the firm's complexity and scale. In high-complexity contexts, high insider ownership tends to produce worse firm performance. This implies that the optimal percentage may vary depending on the specific circumstances of the company.
3. Performance Considerations: A study by K. Park (2010) found a positive and significant relationship between insider ownership and firm performance, indicating that up to a certain point, increased insider ownership can lead to better corporate performance. However, it is important to note that the relationship is not linear, and a quadratic model showed that the effect of insider ownership on performance follows a diminishing returns pattern.
4. Agency Theory: From an agency theory perspective, insider ownership can help align the interests of managers with those of shareholders, potentially improving firm value. However, excessive ownership can lead to an overconcentration of power and may not be beneficial for the company's performance.

In conclusion, while there is no one-size-fits-all answer to the optimal insider ownership percentage for a good company, a moderate level of insider ownership that aligns with the company's specific context and performance goals can be beneficial. Companies should consider their unique circumstances, including industry complexity, firm scale, and the potential for agency conflicts, when determining the appropriate level of insider ownership.