| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 5083020 | International Review of Economics & Finance | 2017 | 37 Pages |
Abstract
This study examines the non-linearity between CEO power and corporate capital structure. Previous studies show that firm leverage responds differently to CEO power changes. In order to capture this non-linear relationship, we employ an innovative dynamic panel threshold model, this novel method allows the estimation of threshold effects with panel data even in case of endogenous regressors. Using a panel-dataset of Chinese SMEs from 2009 to 2013, we find that a CEO power threshold exists in the CEO power-firm leverage association. CEO power has a strong positive and statistically significant determinant of firm leverage, in the “low-CEO power” firms. However, at “high-CEO” regime, the impact is negative but insignificant determinant of leverage. The results are robust to alternative measures of leverage and CEO power, as well as additional explanatory variables.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Chi Chur Chao, May Hu, Qaiser Munir, Tongxia Li,