Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5089286 | Journal of Banking & Finance | 2013 | 15 Pages |
Abstract
This study examines how different components of executive compensation affect the cost of debt. We find that debt-like and equity-like pay components have differing effects: an increase in defined benefit pensions is associated with lower bond yield spread, while higher share holdings lead to higher spreads. In addition, we find that stock options have a mixed impact on the cost of debt whereas cash bonus has no significant impact. Overall, our results indicate that corporate bondholders are fully aware of both risk-taking and risk-avoiding incentives created by various executive pay components.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Rezaul Kabir, Hao Li, Yulia V. Veld-Merkoulova,