File(s) under permanent embargo
CEO inside debt and investment-cash flow sensitivity
journal contribution
posted on 2023-05-19, 07:31 authored by Han, J, Pan, ZThis paper provides a new explanation for investment-cash flow sensitivity from the perspective of CEO inside debt holdings. We examine the effect of CEO pensions and deferred compensation (inside debt) on investment-cash flow sensitivity for a sample of U.S. manufacturing firms from 2006 to 2012. We find that the firms with higher relative CEO leverage ratios (CEO’s debt/ equity ratio scaled by the firm’s debt/equity ratio) generate higher investment-cash flow sensitivity. Moreover, one standard deviation increase in the logarithm of the relative CEO leverage ratio enlarges investment-cash flow sensitivity by 50 per cent. This positive relationship still holds even after we take account of endogeneity and financial constraints.
History
Publication title
Accounting and FinanceVolume
56Pagination
423-443ISSN
0810-5391Department/School
TSBEPublisher
Wiley-Blackwell Publishing AsiaPlace of publication
AustraliaRights statement
© 2015 AFAANZRepository Status
- Restricted