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CEO Inside Debt and Costs of Bank Debt Financing

한중호
경영연구소 (Management Research Center)|2011.12|Seoul Journal of Business|제17권 제2호|pp. 123-149|DOI 10.35152/snusjb.2011.17.2.005

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참고문헌

키워드

Loan TermsInside DebtManagerial AgencyCosts of debtDebt Contracts

초록

This study examines the role of CEO’s pensions and deferred compensations by exploring their impacts on pricing and non-pricing contract terms of bank loans. CEO’s inside debt, defined as the sum of defined benefit pension and deferred compensations, pays fixed amounts at periodic intervals. We find that higher inside debt holdings significantly reduce both loan rate spreads and demands for collateral. We also find that such effects are particularly pronounced under weak external governance proxied by a degree of anti-takeover defenses. Overall, our results support the idea that debt-like incentives for CEOs increase convergence of interests between managers and creditors.

Abstract

This study examines the role of CEO’s pensions and deferred compensations by exploring their impacts on pricing and non-pricing contract terms of bank loans. CEO’s inside debt, defined as the sum of defined benefit pension and deferred compensations, pays fixed amounts at periodic intervals. We find that higher inside debt holdings significantly reduce both loan rate spreads and demands for collateral. We also find that such effects are particularly pronounced under weak external governance proxied by a degree of anti-takeover defenses. Overall, our results support the idea that debt-like incentives for CEOs increase convergence of interests between managers and creditors.

참고문헌 (34)

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