Chief Executive Officer Inside Debt Holdings and Labor Investment Efficiency1. (28th August 2019)

• Record Type: Journal Article
• Authors: Mo, Kyoungwon; Kim, Young Jin; Park, Kyung Jin
• Is Part Of: Asia-Pacific journal of financial studies. Volume 48:Number 4(2019:Aug.)
• Page Start: 476
• Page End: 502
• Publication Date: 2019-08-28
• Subjects: Inside debt -- CEO pension -- Labor investment -- Agency problem -- Financial liquidity -- Long‐term survival; Pacific Area -- Economic conditions -- Periodicals; Finance -- Asia -- Periodicals; Finance -- Pacific Area -- Periodicals; Asia -- Economic conditions -- Periodicals; 332.09505
• DOI: 10.1111/ajfs.12269
• Languages: English
• ISSNs: 2041-9945

Abstract

Abstract: We show how chief executive officer (CEO) inside debt holdings affect corporations' labor investment behavior. We empirically find a positive association between CEO inside debt holdings shown to increase their conservatism and long‐term horizons due to deferred payments and labor investment efficiency recognized as an integral factor in a firm's long‐term survival and growth. Additional analyses reveal that CEO inside debt holdings lead to a greater tendency to reduce net hiring amid excess labor availability than is observed when levels are optimal. This tendency is especially marked when CEO power is strong and when the firm has relatively high financial liquidity and leverage.