A model of managerial compensation, firm leverage and credit stimulus

We study a model in which leverage and compensation are both choice variables for the firm and borrowing spreads are endogenous. First, we analyze the correlation between leverage and variable compensation. We show that allowing for endogenous compensation and leverage can explain the conflicting fi...

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Detalles Bibliográficos
Autores: Gete, Pedro, Chakraborti, Rajdeep, Dahiya, Sandeep, Ge, Lei
Tipo de recurso: artículo
Fecha de publicación:2024
País:España
Institución:IE
Repositorio:Repositorio IE
OAI Identifier:oai:repositorio.ie.edu:20.500.14417/3295
Acceso en línea:https://doi.org/10.1016/j.jfs.2024.101248
https://hdl.handle.net/20.500.14417/3295
Access Level:acceso abierto
Palabra clave:Compensation
Credit policies
Executive ownership
Leverage
53 Ciencias Económicas
ODS 8 - Trabajo decente y crecimiento económico
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oai_identifier_str oai:repositorio.ie.edu:20.500.14417/3295
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repository_id_str
spelling A model of managerial compensation, firm leverage and credit stimulusGete, PedroChakraborti, RajdeepDahiya, SandeepGe, LeiCompensationCredit policiesExecutive ownershipLeverage53 Ciencias EconómicasODS 8 - Trabajo decente y crecimiento económicoWe study a model in which leverage and compensation are both choice variables for the firm and borrowing spreads are endogenous. First, we analyze the correlation between leverage and variable compensation. We show that allowing for endogenous compensation and leverage can explain the conflicting findings of the empirical literature. We uncover a new channel of complementarity between effort and leverage that induces a correlation sign opposite to what current theoretical models predict. Second, we study the dynamics of leverage and compensation design after a credit stimulus. We derive a set of new empirical predictions. For outward-shifts in credit supply, variable compensation is increasing in leverage growth. Moreover, variable compensation increases after the credit stimulus, especially for firms with low idiosyncratic risk.yesPublishedElsevierMinisterio de Ciencia, Innovación y UniversidadesAgencia Estatal de Investigaciónhttps://ror.org/02jjdwm75202420242024info:eu-repo/semantics/articleapplication/pdfapplication/pdfhttps://doi.org/10.1016/j.jfs.2024.101248https://hdl.handle.net/20.500.14417/3295reponame:Repositorio IEinstname:IEInglésIE Business SchoolPID2021-125359NB-I0MCIN/AEI/10.13039/501100011033/FEDERIE UniversityFinanceAttribution-NonCommercial-NoDerivatives 4.0 Internationalhttp://creativecommons.org/licenses/by-nc-nd/4.0/info:eu-repo/semantics/openAccessoai:repositorio.ie.edu:20.500.14417/32952026-06-15T12:40:57Z
dc.title.none.fl_str_mv A model of managerial compensation, firm leverage and credit stimulus
title A model of managerial compensation, firm leverage and credit stimulus
spellingShingle A model of managerial compensation, firm leverage and credit stimulus
Gete, Pedro
Compensation
Credit policies
Executive ownership
Leverage
53 Ciencias Económicas
ODS 8 - Trabajo decente y crecimiento económico
title_short A model of managerial compensation, firm leverage and credit stimulus
title_full A model of managerial compensation, firm leverage and credit stimulus
title_fullStr A model of managerial compensation, firm leverage and credit stimulus
title_full_unstemmed A model of managerial compensation, firm leverage and credit stimulus
title_sort A model of managerial compensation, firm leverage and credit stimulus
dc.creator.none.fl_str_mv Gete, Pedro
Chakraborti, Rajdeep
Dahiya, Sandeep
Ge, Lei
author Gete, Pedro
author_facet Gete, Pedro
Chakraborti, Rajdeep
Dahiya, Sandeep
Ge, Lei
author_role author
author2 Chakraborti, Rajdeep
Dahiya, Sandeep
Ge, Lei
author2_role author
author
author
dc.contributor.none.fl_str_mv Ministerio de Ciencia, Innovación y Universidades
Agencia Estatal de Investigación
https://ror.org/02jjdwm75
dc.subject.none.fl_str_mv Compensation
Credit policies
Executive ownership
Leverage
53 Ciencias Económicas
ODS 8 - Trabajo decente y crecimiento económico
topic Compensation
Credit policies
Executive ownership
Leverage
53 Ciencias Económicas
ODS 8 - Trabajo decente y crecimiento económico
description We study a model in which leverage and compensation are both choice variables for the firm and borrowing spreads are endogenous. First, we analyze the correlation between leverage and variable compensation. We show that allowing for endogenous compensation and leverage can explain the conflicting findings of the empirical literature. We uncover a new channel of complementarity between effort and leverage that induces a correlation sign opposite to what current theoretical models predict. Second, we study the dynamics of leverage and compensation design after a credit stimulus. We derive a set of new empirical predictions. For outward-shifts in credit supply, variable compensation is increasing in leverage growth. Moreover, variable compensation increases after the credit stimulus, especially for firms with low idiosyncratic risk.
publishDate 2024
dc.date.none.fl_str_mv 2024
2024
2024
dc.type.none.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://doi.org/10.1016/j.jfs.2024.101248
https://hdl.handle.net/20.500.14417/3295
url https://doi.org/10.1016/j.jfs.2024.101248
https://hdl.handle.net/20.500.14417/3295
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv IE Business School
PID2021-125359NB-I0
MCIN/AEI/10.13039/501100011033/FEDER
IE University
Finance
dc.rights.none.fl_str_mv Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
info:eu-repo/semantics/openAccess
rights_invalid_str_mv Attribution-NonCommercial-NoDerivatives 4.0 International
http://creativecommons.org/licenses/by-nc-nd/4.0/
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
application/pdf
dc.publisher.none.fl_str_mv Elsevier
publisher.none.fl_str_mv Elsevier
dc.source.none.fl_str_mv reponame:Repositorio IE
instname:IE
instname_str IE
reponame_str Repositorio IE
collection Repositorio IE
repository.name.fl_str_mv
repository.mail.fl_str_mv
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score 15,81155

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