Managers, Owners, and The Pricing of Risky Debt: An Empirical Analysis

@inproceedings{Bagnani1994ManagersOA,
  title={Managers, Owners, and The Pricing of Risky Debt: An Empirical Analysis},
  author={Elizabeth Strock Bagnani and Nikolaos T. Milonas and Anthony Saunders and Nickolaos G. Travlos},
  year={1994}
}
This article examines managerial ownership structure and return premia on corporate bonds. It is argued that, when managerial ownership is low, an increase in managerial ownership increases management's incentives to increase stockholder wealth at the expense of bondholder wealth. When ownership increases more, however, it is argued that management becomes more risk averse, with incentives more closely aligned with bondholders. This study finds a positive relation between managerial ownership… CONTINUE READING

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