CEO Ownership, Leasing, and Debt Financing

Financial Management, Vol. 28, Iss. 2, Summer 1999

Posted: 10 Aug 2001

See all articles by Hamid Mehran

Hamid Mehran

Independent

Robert A. Taggart

Boston College - Carroll School of Management; National Bureau of Economic Research (NBER)

David Yermack

New York University (NYU) - Stern School of Business

Abstract

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.

Suggested Citation

Mehran, Hamid and Taggart, Robert A. and Yermack, David, CEO Ownership, Leasing, and Debt Financing. Financial Management, Vol. 28, Iss. 2, Summer 1999. Available at SSRN: https://ssrn.com/abstract=267692

Hamid Mehran (Contact Author)

Independent ( email )

No Address Available

Robert A. Taggart

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Dept. of Finance
Chestnut Hill, MA 02467
United States
617-552-4113 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

David Yermack

New York University (NYU) - Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY 10012-1126
United States
212-998-0357 (Phone)
212-995-4220 (Fax)

HOME PAGE: http://www.stern.nyu.edu/~dyermack

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