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Title: 

Managerial Entrenchment and Capital Structure Decisions

Authors: Philip G., Berger
Ofek, Eli
Yermack, David
Issue Date: Dec-1996
Series/Report no.: FIN-96-014
Abstract: We study associations between managerial entrenchment and firms’ capital structures, with results generally suggesting that entrenched CEOs seek to avoid debt. In a cross-sectional analysis, we find that leverage levels are lower when CEOs do not face pressure from either ownership and compensation incentives or active monitoring. In an analysis of leverage changes, we find that leverage increases in the aftermath of entrenchment-reducing shocks to managerial security, including unsuccessful tender offers, involuntary CEO replacements, and the addition to the board of major stockholders.
URI: http://hdl.handle.net/2451/26958
Appears in Collections:Finance Working Papers

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