Corporate cash holdings and CEO compensation incentives

Liu, Yixin; Mauer, David C.

doi:10.1016/j.jfineco.2011.05.008

Cited by 253 publications

(195 citation statements)

References 28 publications

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“…6 Columns (3) and (4) of Table 7 present the subsample results of estimating Equation 1 for high-Z and low-Z groups. Our third measure of financial constraint, following the literature (Carpenter, Fazzari, Petersen, Kashyap, & Friedman, 1994;Faulkender & Wang, 2006;Liu & Mauer, 2011), is firm size. We measure firm size based on a firm's net assets, that is, total assets minus cash and short-term investments.…”

Section: Role Of Financial Constraintsmentioning

confidence: 99%

Impact of board gender composition on corporate debt maturity structures

Zhang

2019

Euro Fin Management

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This paper examines the effect of female directors on corporate debt maturity structures. We find that firms with a higher ratio of female directors tend to have a larger proportion of short‐maturity debt. This effect is more pronounced with female independent directors and is insignificant with female inside directors. These findings remain robust under propensity score matching and instrumental variable approaches to address potential endogeneity concerns. Furthermore, we find that our results are driven primarily by firms with weak governance quality and low financial constraints. We also find that the effect does not differ between high‐ and low‐leveraged firms, and there is a negative relation between female directors and likelihood of overinvestment. This evidence suggests that female directors view short‐term debt as a monitoring device.

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Section: Role Of Financial Constraintsmentioning

confidence: 99%

Impact of board gender composition on corporate debt maturity structures

Zhang

2019

Euro Fin Management

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“…1 Thus, given the propensity for accumulated cash to lower firm risk (Kim, Mauer, and Sherman 1998;Opler et al 1999;Ozkan and Ozkan 2004), it is an excellent instrument for a manager seeking to implement personally advantageous corporate policies that are inconsistent with the risk preferences of shareholders. This is reflected in the fact that it has figured prominently in the recent compensation literature (e.g., Chava and Purnanandam 2010;Liu and Mauer 2011;Tong 2010).…”

Section: Introductionmentioning

confidence: 99%

“…In Chava and Purnanandam (2010) vega is the option incentive that reduces cash holdings and delta is the risk aversion proxy that increases them. In Liu and Mauer (2011) vega is risk reducing and delta is risk inducing. In Tong (2010) both vega and delta are risk-inducing incentives.…”

Section: Introductionmentioning

confidence: 99%

“…In Tong (2010) both vega and delta are risk-inducing incentives. 3 1 See Liu and Mauer (2011) for a discussion of the relation between cash holdings and convenants. 2 Vega corresponds to the change in managerial wealth with respect to the change in the volatility of the firm's returns whereas delta corresponds to the change in managerial wealth with respect to a change in the value of the firm's stock.…”

Section: Introductionmentioning

confidence: 99%

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Convexity, Magnification, and Translation: The Effect of Managerial Option‐based Compensation on Corporate Cash Holdings

Belghitar

Clark²

2014

J of Financial Research

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Using the distinctions among the convexity, magnification, and translation effects, we identify the pertinent parameters and examine empirically the relation between cash holdings and option-based managerial compensation. We show that changes in delta reduce the effects of magnification and convexity on managerial risk aversion. We also provide evidence that there is a negative relation between the option-based incentives delta and vega and cash holdings. These results are robust when incentives are extended to include all executive board members and when the sample is broken down according to different risk characteristics.

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“…24 Liu and Mauer (2011) also report a negative coefficient on the interaction between change in cash and institutional block holdings.…”

Section: Analyst Following and The Value Of Cashmentioning

confidence: 97%