The impact of CEO power on corporate capital structure: New evidence from dynamic panel threshold analysis

Chao, C, Hu, M, Munir, Q and Li, T 2017, 'The impact of CEO power on corporate capital structure: New evidence from dynamic panel threshold analysis', International Review of Economics and Finance, vol. 51, pp. 107-120.


Document type: Journal Article
Collection: Journal Articles

Title The impact of CEO power on corporate capital structure: New evidence from dynamic panel threshold analysis
Author(s) Chao, C
Hu, M
Munir, Q
Li, T
Year 2017
Journal name International Review of Economics and Finance
Volume number 51
Start page 107
End page 120
Total pages 14
Publisher Elsevier BV
Abstract This study examines the non-linearity between CEO power and corporate capital structure. Previous studies show that firm leverage responds differently to CEO power changes. In order to capture this non-linear relationship, we employ an innovative dynamic panel threshold model, this novel method allows the estimation of threshold effects with panel data even in case of endogenous regressors. Using a panel-dataset of Chinese SMEs from 2009 to 2013, we find that a CEO power threshold exists in the CEO power-firm leverage association. CEO power has a strong positive and statistically significant determinant of firm leverage, in the "low-CEO power" firms. However, at "high-CEO" regime, the impact is negative but insignificant determinant of leverage. The results are robust to alternative measures of leverage and CEO power, as well as additional explanatory variables.
Subject Banking, Finance and Investment not elsewhere classified
Keyword(s) Capital structure
CEO power
Dynamic panel threshold
Nonlinear relationship
DOI - identifier 10.1016/j.iref.2017.05.010
Copyright notice © 2017 Published by Elsevier Inc.
ISSN 1059-0560
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