Kabir, R., Li, H. and Veld-Merkoulova, Y. (2013) Executive compensation and the cost of debt. Journal of Banking and Finance, 37(8), pp. 2893-2907. (doi: 10.1016/j.jbankfin.2013.04.020)
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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.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Veld-Merkoulova, Professor Yulia |
| Authors: | Kabir, R., Li, H., and Veld-Merkoulova, Y. |
| College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
| Journal Name: | Journal of Banking and Finance |
| Publisher: | Elsevier Ltd. |
| ISSN: | 0378-4266 |
| ISSN (Online): | 1872-6372 |
| Published Online: | 29 April 2013 |
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