Managerial Entrenchment and Capital Structure Decisions

@article{Berger1995ManagerialEA,
  title={Managerial Entrenchment and Capital Structure Decisions},
  author={Philip G. Berger and Elie Ofek and David Yermack},
  journal={IO: Empirical Studies of Firms \& Markets},
  year={1995}
}
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… 

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