Executive risk-taking and the agency cost of debt

Autor:	Ronald C. Anderson, Matthew Imes
Rok vydání:	2021
Předmět:	Economics and Econometrics Bond media_common.quotation_subject Agency cost Equity (finance) Monetary economics Shareholder value Incentive Shareholder Cost of capital Debt Business Finance media_common
Zdroj:	Journal of Empirical Finance. 64:78-94
ISSN:	0927-5398
DOI:	10.1016/j.jempfin.2021.08.005
Popis:	Firms compensate managers to maximize shareholder value, yet these same incentives affect bondholder risk. We investigate the relation between executive equity pay and the cost of debt. Our findings indicate a “u-shaped” relation between bond yields and equity pay. These results are consistent with the notion that bondholders prefer a moderate amount of executive equity pay and above or below that level, bondholders increase yields to protect their interests. These findings suggest that moderate levels of equity pay mitigate the agency costs between firm shareholders and bondholders.
Databáze:	OpenAIRE
Externí odkaz:	https://explore.openaire.eu/search/publication?articleId=doi_________::63831ca287c3b581d1691bab061ed6ae https://doi.org/10.1016/j.jempfin.2021.08.005 Zobrazit plný text záznamu Full Text from ScienceDirect