Managerial Entrenchment and Capital Structure Decisions

Download or read book Managerial Entrenchment and Capital Structure Decisions written by Philip G. Berger and published by . This book was released on 1997 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.