Seeking Safety: The Relation between CEO Inside Debt Holdings and the Riskiness of Firm Investment and Financial Policies

@article{Cassell2011SeekingST,
  title={Seeking Safety: The Relation between CEO Inside Debt Holdings and the Riskiness of Firm Investment and Financial Policies},
  author={Cory A. Cassell and S. Huang and J. M. S{\'a}nchez and M. Stuart},
  journal={Microeconomics: Intertemporal Firm Choice & Growth},
  year={2011}
}
  • Cory A. Cassell, S. Huang, +1 author M. Stuart
  • Published 2011
  • Economics
  • Microeconomics: Intertemporal Firm Choice & Growth
  • CEO inside debt holdings (pension benefits and deferred compensation) are generally unsecured and unfunded liabilities of the firm. Because these characteristics of inside debt expose the CEO to default risk similar to that faced by outside creditors, theory predicts that CEOs with large inside debt holdings will display lower levels of risk-seeking behavior (Jensen and Meckling, 1976). Consistent with the theoretical predictions, we find a negative association between CEO inside debt holdings… CONTINUE READING
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