Wanzenried, Gabrielle (April 2003). Capital Structure Inertia and CEO Compensation (Diskussionsschriften 03-05). Bern: Universität Bern Volkswirtschaftliches Institut
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There is strong empirical evidence that firms do not always adjust their capital structure according to established capital structure theories. Rather, they follow a passive strategy such that capital structure changes are mainly driven by their stock returns. This paper investigates to what extent this behavioral inertia can be explained by the structure of executive compensation. Our data comprise US firms in the manufacturing industries over the years 1992 to 2000. We estimate a dynamic panel data model and find evidence for the hypothesis that stronger incentives schemes for CEOs lead to less capital structure inertia.
Item Type: |
Working Paper |
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Division/Institute: |
03 Faculty of Business, Economics and Social Sciences > Department of Economics > Institute of Economics |
Subjects: |
300 Social sciences, sociology & anthropology > 330 Economics |
Series: |
Diskussionsschriften |
Publisher: |
Universität Bern Volkswirtschaftliches Institut |
Language: |
English |
Submitter: |
Aline Lehnherr |
Date Deposited: |
11 Jun 2020 17:03 |
Last Modified: |
23 Apr 2021 15:35 |
JEL Classification: |
G32, J33, C23 |
BORIS DOI: |
10.7892/boris.144072 |
URI: |
https://boris.unibe.ch/id/eprint/144072 |
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