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Título
Does debt concentration depend on the risk-taking incentives in CEO compensation?
Autor
Facultad/Centro
Área de conocimiento
Título de la revista
Journal of Corporate Finance
Datos de la obra
Castro, P., Keasey, K., Amor-Tapia, B., Tascon, M. T., y Vallascas, F. (2020). Does debt concentration depend on the risk-taking incentives in CEO compensation? Journal of Corporate Finance, 64, 101684. https://doi.org/10.1016/J.JCORPFIN.2020.101684
Editor
Elsevier
Fecha
2020
ISSN
0929-1199
Resumo
[EN] 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.
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