CEO Ownership, Leasing, and Debt Financing
Financial Management, Vol. 28, Iss. 2, Summer 1999
Posted: 10 Aug 2001
In this empirical study, we examine the effect of CEO stock ownership on leasing. Although financial contracting theory suggests that ownership structure is potentially an important determinant of debt financing and leasing, its effect on leasing has not been previously explored. We also control for explanatory factors that have been found important in other leasing studies. We find that CEO ownership is positively related to companies' leasing and debt financing activity, consistent with contracting theory. This suggests that CEOs with large ownership stakes engage in more leasing to reduce their exposure to obsolescence and other asset-specific risks.
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