Firm cash holdings and CEO inside debt
We examine the effect of CEO pensions and deferred compensation (inside debt) on firm cash holdings and the value of cash. We document a positive relation between CEO inside debt and firm cash holdings. This positive effect is magnified by firm leverage and mitigated by the presence of financial con...
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| Veröffentlicht in: | Journal of banking & finance 2014-05, Vol.42, p.83-100 |
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| container_end_page | 100 |
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| container_title | Journal of banking & finance |
| container_volume | 42 |
| creator | Liu, Yixin Mauer, David C. Zhang, Yilei |
| description | We examine the effect of CEO pensions and deferred compensation (inside debt) on firm cash holdings and the value of cash. We document a positive relation between CEO inside debt and firm cash holdings. This positive effect is magnified by firm leverage and mitigated by the presence of financial constraints. We further find that the marginal value of cash to shareholders declines as CEO inside debt increases. Our evidence supports the view that inside debt tilts managerial incentives toward bondholders and helps balance the competing interests of stockholders and bondholders. The evidence also suggests, however, that inside debt can harm shareholder value by encouraging excess cash holdings. |
| doi_str_mv | 10.1016/j.jbankfin.2014.01.031 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0378-4266 |
| ispartof | Journal of banking & finance, 2014-05, Vol.42, p.83-100 |
| issn | 0378-4266 1872-6372 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_1536008564 |
| source | Access via ScienceDirect (Elsevier) |
| subjects | Cash holdings Cash management Chief executive officers Debt Deferred compensation Inside debt Investment analysis Pension Pensions Personal finance Shareholders wealth Stockholders Studies |
| title | Firm cash holdings and CEO inside debt |
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