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Appears in Collections:Accounting and Finance Working Papers
Title: Executive Compensation and the Cost of Debt
Author(s): Kabir, Rezaul
Li, Hao
Veld-Merkoulova, Yulia V
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Citation: Kabir R, Li H & Veld-Merkoulova YV (2013) Executive Compensation and the Cost of Debt. SSRN Working Paper Series, 1537318.
Keywords: Executive compensation
CEO pay
Cost of debt
Yield spread
Issue Date: 28-Feb-2013
Date Deposited: 17-Apr-2013
Publisher: Social Science Research Network
Series/Report no.: SSRN Working Paper Series, 1537318
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.
Type: Working Paper
Rights: Authors retain copyright.
Affiliation: Accounting & Finance
University of Stirling
Accounting & Finance

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