کد مقاله کد نشریه سال انتشار مقاله انگلیسی نسخه تمام متن
5093175 1478435 2016 19 صفحه PDF دانلود رایگان
عنوان انگلیسی مقاله ISI
Severance agreements and the cost of debt
ترجمه فارسی عنوان
توافق نامه های جداسازی و هزینه بدهی
موضوعات مرتبط
علوم انسانی و اجتماعی مدیریت، کسب و کار و حسابداری کسب و کار و مدیریت بین المللی
چکیده انگلیسی


- Severance agreements (SA) are associated with a higher cost of debt
- SAs are now often paid regardless of whether there is a change in control
- SAs lead to an increase in firm risk and the probability of CEO turnover

Upon examining the language used in recent SEC filings, we find that severance agreements are often paid whether or not the CEO leaves the firm due to a change in control. We hypothesize that since severance agreements compensate CEOs in the event of termination, CEOs with these agreements will have an incentive to increase firm risk and decrease effort. Consistent with this hypothesis, we document a significant positive relation between the use of severance agreements and the cost of debt (10% higher yield spreads for firms with severance agreements). The results hold after controlling for the probability of takeover, the probability of CEO turnover, and whether the firm has investment or non-investment grade debt. These results can be explained by an increase in firm risk and a higher likelihood of CEO turnover associated with severance agreements. Overall, the evidence suggests that the effects of severance agreements extend beyond takeovers, and that these additional implications are primarily negative for the firm and for debt holders in particular.

ناشر
Database: Elsevier - ScienceDirect (ساینس دایرکت)
Journal: Journal of Corporate Finance - Volume 41, December 2016, Pages 426-444
نویسندگان
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