, anticipated debt renegotiation between a higher-type manager and the creditor reduces expected firm value. Only lower …-type managers can issue debt to avoid shareholder takeover …

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 …

, unobserved firm and market effects, and debt governance. The impact of CEO risk aversion is economically significant …

Managerial compensation theory proposes that both equity- and debt-type compensation should be included in the optimal … shareholders (debtholders) should respond negatively to debt-type (equity-type) compensation. In this study, we examine insider … trading in order to determine how firm insiders react to CEO debt-type compensation. Despite existing theoretical predictions …

Consistent with the incentive implication of inside debt, I show that active equity mutual funds invest less in … companies whose CEOs are awarded with higher debt-like compensation, whereas corporate bond mutual funds invest more in such … companies. This finding persists after accounting for endogeneity: first, I use the first-time disclosure of inside debt …