CEO inside debt holdings and credit ratings

Hasan, Mostafa Monzur; Hossain, Ashrafee Tanvir; Hossain, Takdir

doi:10.1016/j.jcae.2022.100337

Cited by 8 publications

(2 citation statements)

References 87 publications

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“…It is therefore not surprising that CEOs with high inside debt exhibit excessive caution in investment decisions (see, e.g., Cassell et al, 2012; Gerakos, 2010; Sundaram & Yermack, 2007) which could at times even harm long‐term sustainability (Hossain et al, 2023). Other evidence that links CEO risk‐aversion (arising out of inside debt) to corporate policy choices include larger cash holdings in firms led by CEOs with high inside debt (Liu et al, 2014), less reliance on trade credit (Hasan et al, 2022), firms enjoying a lower cost of debt along with fewer restrictive covenants (see, e.g., Anantharaman et al, 2014; Chava et al, 2010), better credit ratings (Hasan et al, 2023), a lower incidence of tax sheltering (Chi et al, 2017), lower payouts (Eisdorfer et al, 2015), higher liquidation values (Chen et al, 2010) and better acquisition deals signified by higher post‐acquisition returns (Bhabra et al, 2022; Phan, 2014). Collectively, extant evidence suggests that higher CEO debt incentives are likely to incentivise CEOs to adopt cautious and prudent investment decisions that are aimed towards limiting their risk exposure.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Asset redeployability and CEO inside debt

Bhabra

Hossain

2023

Accounting & Finance

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Using a large sample of US firms for the period 2006–2015, we investigate the relationship between asset redeployability (AR) and a Chief Executive Officer's (CEO) inside debt holdings (CID) (pension benefits and deferred compensation). We find a positive association between AR and CID. In addition, we also find that this relationship is stronger in firms that are more financially constrained and during times of economic uncertainty. Collectively, these findings suggest that asset market frictions captured by AR are better determinants of liquidation value than asset tangibility. Our results are robust to an array of sensitivity/robustness tests and endogeneity concerns.

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Section: Hypotheses Developmentmentioning

confidence: 99%

Asset redeployability and CEO inside debt

Bhabra

Hossain

2023

Accounting & Finance

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“…In this instance, the role of X 2 as a moderating variable is determined by evaluating β 2 , the interaction term parameter estimates (Helm & Mark, 2012). In order to avoid possible endogenous errors and improve the research results' robustness, this study takes the first‐order lag term of all relevant CSR indicators as instrumental variables, and all models are analysed using the 2SLS method (Lee & Chen, 2011; Liew & Devi, 2020; Tung, 2022; Hasan et al, 2023). This research develops Model 1 to evaluate hypothesis 1, namely, the influence of CSR on corporate value.…”

Section: Model Designmentioning

confidence: 99%

Revisiting the nexus between corporate social responsibility and corporate value: Evidence from China

Wu,

Liew

2023

Corp Soc Responsibility Env

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PurposeUnder the concept of sustainable development guided by ‘carbon peak’ and ‘carbon neutral’, corporate social responsibility (CSR) performance has become the focus of attention in all sectors of society. With the gradual deepening of China's ‘new economic normal’ development, firms face increasing environmental uncertainty in the market. This study aims to embed CSR, financial flexibility (FF), institutional investors (INST), and corporate value into the same theoretical framework and conduct heterogeneity analysis on the nature of property rights, heavily polluting industries, and marketisation level.Design/Methodology/ApproachBased upon the observation data of listed firms in Shanghai and Shenzhen A‐shares in China from 2011 to 2021, this study uses Stata software for data processing, analysis, and two‐stage least‐squares (2SLS) models to solve endogenous problems.FindingsThe research results show that improving CSR performance increases corporate value, while INST and FF moderate the relationship between them. Further heterogeneity analysis found that the nature of property rights, heavily polluting industries, and marketisation level have different impacts on these moderating effects. This result provides ideas for clarifying the economic impact of enhancing the firms' CSR performance in the current era.Originality/ValueFirst, from the standpoint of CSR performance, it enhances the literature on the key corporate values in China. Second, from the perspective of corporate value, it has enriched the CSR literature and provided a new perspective for further clarifying the significance of improving the CSR performance of firms at this stage. Third, from the perspective of INST and FF, this research examines the moderating mechanism of CSR performance on corporate value. Hence, it provides a reference for further improving the efficiency of resource allocation in the capital markets.

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