Castro, P, Keasey, K orcid.org/0000-0001-7645-3274, Amor-Tapia, B et al. (2 more authors) (2020) Does debt concentration depend on the risk-taking incentives in CEO compensation? Journal of Corporate Finance, 64. 101684. ISSN 0929-1199
Abstract
Using a sample of US non-financial firms we show that an increase in risk-taking incentives in CEO pay is associated with a greater debt concentration by debt type. This result holds in various empirical settings that account for endogeneity and is in line with the view that a more concentrated debt structure in fewer debt types reduces coordination problems among creditors and the related financial distress costs. Along these lines, we find our results are stronger in riskier firms, in firms with more volatile cash-flows or less stakeholder-orientation and when CEO pay incentives are embedded in vested options that are expected to favor business choices with more immediate negative effects on debtholders' wealth. Overall, our findings are consistent with theoretical models in which the debt structure of a firm acts as a commitment device.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2020, Elsevier B.V. All rights reserved. This is an author produced version of an article published in Journal of Corporate Finance. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Debt concentration; Executive compensation; Corporate governance |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 09 Jul 2020 14:31 |
Last Modified: | 27 Dec 2021 01:38 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.jcorpfin.2020.101684 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:162995 |
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