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Chief Executive Officer Inside Debt Holdings and Labor Investment Efficiency
Author(s) -
Mo Kyoungwon,
Kim Young Jin,
Park Kyung Jin
Publication year - 2019
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12269
Subject(s) - debt , leverage (statistics) , chief executive officer , market liquidity , monetary economics , officer , investment (military) , business , debt ratio , economics , finance , financial system , labour economics , management , machine learning , politics , computer science , law , political science
Abstract We show how chief executive officer ( CEO ) inside debt holdings affect corporations’ labor investment behavior. We empirically find a positive association between CEO inside debt holdings shown to increase their conservatism and long‐term horizons due to deferred payments and labor investment efficiency recognized as an integral factor in a firm's long‐term survival and growth. Additional analyses reveal that CEO inside debt holdings lead to a greater tendency to reduce net hiring amid excess labor availability than is observed when levels are optimal. This tendency is especially marked when CEO power is strong and when the firm has relatively high financial liquidity and leverage.