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| - Abstract This study examines the impact of insider managerial ownership on financial performance of publicly traded tourist hotels in Taiwan. Insider managerial shareholding (IMS) includes two different classes of owners: managers and directors (i.e., managers’ shareholding [MAS] plus directors’ shareholding [DIRS]). The indicators of financial performance under consideration are return on assets (ROA), return on equity (ROE), stock return (SR), and Tobin's Q. In addition to analyzing total insider managerial ownership (IMS), the study splits IMS into two components (MAS and DIRS) and examines each of them, separately. Subsequently, panel regression tests examine the effects of IMS, MAS, and DIRS on financial performance of Taiwanese tourist hotels. Test results suggest that IMS explains ROA, ROE and Tobin's Q, but not SR. Further, compared to MAS, DIRS has a more significant impact on hotel performance. Specifically, an inverted U-shape represents the effects of IMS and DIRS on hotel performance (ROA, ROE and Tobin's Q), indicating that both IMS and DIRS have a significantly positive impact on hotel performance up to an optimal point (supporting the convergence-of-interests hypothesis). Further, when IMS and DIRS are greater than their corresponding optimal points, these two factors can significantly deteriorate hotel performance (supporting the entrenchment hypothesis).
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