CEO power and matching leverage preferences

Timo Korkeamäki*, Eva Liljeblom, Daniel Pasternack

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

8 Citations (Scopus)

Abstract

We study the effect of managerial power on CEOs' tendency to imprint their personal leverage preferences upon the firms they manage. Using a unique data source that allows us to measure personal wealth and indebtness in great detail, we find a connection between CEOs' personal leverage and that of their firms. The connection is driven by the CEOs with a longer tenure and the CEOs who serve in a dual role. The connection is significantly weaker for those CEOs who have a proportion of their personal wealth tied to the firm. Presence of block holders also weakens the connection.

Original languageEnglish
Pages (from-to)19-30
Number of pages12
JournalJOURNAL OF CORPORATE FINANCE
Volume45
DOIs
Publication statusPublished - 1 Aug 2017
MoE publication typeA1 Journal article-refereed

Keywords

  • CEO behaviour
  • Matching preferences
  • Personal leverage

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