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Managerial Entrenchment and Capital Structure : New Evidence
John, Kose; Litov, Lubomir P. - 2023
Prior research has often taken the view that entrenched managers tend to avoid debt. Contrary to this view, we find that firms with entrenched managers, as measured by the Gompers et al. (2003) governance index, use more debt finance and have higher leverage ratios. To address the potential...
Persistent link: https://www.econbiz.de/10014253921
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Contract Renegotiation and the Optimality of Resetting Executive Stock Options
Acharya, Viral V. - 1998
Recent empirical work has documented the tendency of corporations to reset strike prices on previously-awarded executive stock option grants when declining stock prices have pushed these options out-of-the-money. This practice has been criticized as counter-productive since it weakens incentives...
Persistent link: https://www.econbiz.de/10012744087
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Governance and Payout Precommitment
John, Kose - 2015
We examine how firms structure payout and debt commitments to address governance weaknesses. Firms with severe agency conflicts precommit through a combination of dividends and debt or through dividends rather than debt alone. Such firms also shift their shareholder payouts towards regular...
Persistent link: https://www.econbiz.de/10012707685
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The Effect of State Antitakeover Laws on the Firm's Bondholders
Francis, Bill B. - 2010
We examine how state antitakeover laws affect bondholders and the cost of debt, and report four findings. First, bonds issued by firms incorporated in takeover friendly states have significantly higher at-issue yield spreads than bonds issued by firms in states with restrictive antitakeover...
Persistent link: https://www.econbiz.de/10012717648
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Corporate Governance and Financing Policy : New Evidence
John, Kose - 2010
Prior research has often taken the view that entrenched managers tend to avoid debt. Contrary to this view, we find that firms with entrenched managers, as measured by the Gompers et al. (2003) governance index, use more debt finance and have higher leverage ratios. To address the potential...
Persistent link: https://www.econbiz.de/10012717777
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Employment Protection and Corporate Cash Holdings : Evidence from China's Labor Contract Law
Cui, Chenyu - 2018
Employment protection increases labor adjustment costs and hence the expected costs of financial distress for labor-intensive firms. It follows that these firms are likely to increase their cash holdings to reduce the risk of financial distress when employment protection is strengthened....
Persistent link: https://www.econbiz.de/10012931372
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Liquidity and Large Shareholder Monitoring
John, Kose - 2019
Permanent or long-term large shareholders have different governance incentives and mechanisms from institutional investors. Liquidity could facilitate either cutting and running by large shareholders or, alternatively, increased monitoring. Using an exogenous shock to liquidity in China, we...
Persistent link: https://www.econbiz.de/10012897174
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Incentives of Fund Managers and Precautionary Fire Sales
Bhardwaj, Abhishek; John, Kose; Mukherjee, Saptarshi - 2021
This paper investigates how precautionary trading behavior of fund managers induced by a higher junior fee component in their compensation structure affects prices of downgraded loans in the leveraged loans market. Using detailed portfolio data from Collateralized Loan Obligation (CLO) funds, we...
Persistent link: https://www.econbiz.de/10014361602
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Common Ownership and Bankruptcy
Anderson, Ronald C.; Durrani, Farooq; John, Kose - 2021
11 process, freefall bankruptcy vs prepack bankruptcy. We examine whether common ownership, i.e., an institution with … presence of common ownership, distressed firms are over 3.3-times more likely to file for Chapter 11 freefall bankruptcy … (rather than prepack) compared to the case without a common owner. Using ownership of passive funds as an instrument for …
Persistent link: https://www.econbiz.de/10013212649
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Does Corporate Governance Matter More for Firms with High Financial Slack?
John, Kose - 2018
The effect of corporate governance may depend on a firm's financial slack. On one hand, financial slack may be spent by managers for their private benefits; a high level is likely associated with severe agency conflicts. Thus corporate governance matters more for high financial slack firms...
Persistent link: https://www.econbiz.de/10012914317