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CEO power and matching leverage preferences

Korkeamäki, Timo; Liljeblom, Eva LU and Pasternack, Daniel (2017) In Journal of Corporate Finance 45. p.19-30
Abstract

We study the effect of managerial power on CEOs' tendency to imprint their personal leverage preferences upon the firms they manage. Using a unique data source that allows us to measure personal wealth and indebtness in great detail, we find a connection between CEOs' personal leverage and that of their firms. The connection is driven by the CEOs with a longer tenure and the CEOs who serve in a dual role. The connection is significantly weaker for those CEOs who have a proportion of their personal wealth tied to the firm. Presence of block holders also weakens the connection.

Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
CEO behaviour, Matching preferences, Personal leverage
in
Journal of Corporate Finance
volume
45
pages
12 pages
publisher
Elsevier
external identifiers
  • scopus:85018616926
  • scopus:85017788600
  • wos:000407655500002
ISSN
0929-1199
DOI
10.1016/j.jcorpfin.2017.04.007
language
English
LU publication?
yes
id
9f5afaa6-975a-48e8-a0cd-87b38bd88ca3
date added to LUP
2017-05-11 14:16:02
date last changed
2018-01-26 08:45:20
@article{9f5afaa6-975a-48e8-a0cd-87b38bd88ca3,
  abstract     = {<p>We study the effect of managerial power on CEOs' tendency to imprint their personal leverage preferences upon the firms they manage. Using a unique data source that allows us to measure personal wealth and indebtness in great detail, we find a connection between CEOs' personal leverage and that of their firms. The connection is driven by the CEOs with a longer tenure and the CEOs who serve in a dual role. The connection is significantly weaker for those CEOs who have a proportion of their personal wealth tied to the firm. Presence of block holders also weakens the connection.</p>},
  author       = {Korkeamäki, Timo and Liljeblom, Eva and Pasternack, Daniel},
  issn         = {0929-1199},
  keyword      = {CEO behaviour,Matching preferences,Personal leverage},
  language     = {eng},
  month        = {08},
  pages        = {19--30},
  publisher    = {Elsevier},
  series       = {Journal of Corporate Finance},
  title        = {CEO power and matching leverage preferences},
  url          = {http://dx.doi.org/10.1016/j.jcorpfin.2017.04.007},
  volume       = {45},
  year         = {2017},
}