Tosun, Onur Kemal ![]() ![]() |
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Abstract
Firms simultaneously choose both their capital and their executive compensation structure. Using the Internal Revenue Code 162(m) tax law as an exogenous shock to compensation structure in a natural experiment setting, I identify firm leverage changes as a result of chief executive officer (CEO) option compensation changes. The evidence provides strong support for debt agency theory. Firms appear to decrease leverage when CEOs are paid with more options and when CEO options become a higher percentage of future cash flows. The findings are robust to controlling for corporate governance and convertible debt.
Item Type: | Article |
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Date Type: | Publication |
Status: | Published |
Schools: | Business (Including Economics) |
Publisher: | Wiley |
ISSN: | 0046-3892 |
Date of First Compliant Deposit: | 2 May 2019 |
Last Modified: | 25 Nov 2024 03:45 |
URI: | https://orca.cardiff.ac.uk/id/eprint/122093 |
Citation Data
Cited 2 times in Scopus. View in Scopus. Powered By Scopus® Data
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