CEOs versus CFOs: Incentives and corporate policies

• 成果类型: Article
• 署名作者: Chava, Sudheer; Purnanandam, Amiyatosh
• 署名单位: University of Michigan System; University of Michigan; Texas A&M University System; Texas A&M University College Station; Mays Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2010.03.018
• 发表日期: 2010
• 页码: 263-278
• 关键词: capital structure; Cash balance; Debt maturity; Accrual; incentives

摘要

We undertake a broad-based study of the effect of managerial risk-taking incentives on corporate financial policies and show that the risk-taking incentives of chief executive officers (CEOs) and chief financial officers (CFOs) significantly influence their firms' financial policies. In particular, we find that CEOs' risk-decreasing (-increasing) incentives are associated with lower (higher) leverage and higher (lower) cash balances. CFOs' risk-decreasing (-increasing) incentives are associated with safer (riskier) debt-maturity choices and higher (lower) earnings-smoothing through accounting accruals. We exploit the stock option expensing regulation of 2004 to establish a causal link between managerial incentives and corporate policies. Our findings have important implications for optimal corporate compensation design. (C) 2010 Elsevier B.V. All rights reserved.