Inside Debt and the Design of Corporate Debt Contracts
认领作者 认领管理权限
发布日期:2011年09月13日 上次修订日期:2023年06月01日


Agency theory posits that debt-like compensation (such as defined-benefit pensions and other deferred compensation) aligns managerial interests more closely with those of debtholders and reduces the agency cost of debt. Consistent with theory, we find that a higher CEO relative leverage, defined as the ratio of the CEO's inside leverage (debt-toequity compensation) to corporate leverage, is associated with lower cost of debt financing and fewer restrictive covenants, for a sample of private loans originated during 2006-2008. These findings persist after accounting for the endogeneity of CEO relative leverage, and are more pronounced for firms with higher default risk. Additional analysis on a sample of new public bond issues also shows a negative relation between CEO relative leverage and bond yield spread. Overall, the evidence supports the notion that debtholders recognize the incentive effects of executive debt-like compensation and adjust the terms of corporate debt contracts accordingly.


  • 浏览次数:

  • 下载次数:



Divya Anantharaman ; Vivian W. Fang ; Guojin Gong ; Inside Debt and the Design of Corporate Debt Contracts (2011年09月13日)

*邮 箱