Managerial Entrenchment and Capital Structure Decision: A Case of Nepal

Pokharel P.R. (2013) Managerial Entrenchment and Capital Structure Decision: A Case of Nepal. NRB ECONOMIC REVIEW Vol. 25-2, p 78-89

12 Pages Posted: 2 Oct 2020

See all articles by Post Raj Pokharel

Post Raj Pokharel

Harvard Pharmaceuticals P. Ltd.; Kathmandu University School of Management; Boston International College

Date Written: August 17, 2013

Abstract

This paper tests the influence of managerial entrenchment and capital structure decisions using Nepalese firms' data and executives view. A majority of earlier studies show that firm leverage is negatively associated with the degree of entrenchment of managers. This study examines whether or not this is consistent in the context of Nepal. The data were taken from top listed companies on NEPSE, pharmaceuticals companies registered in Department of Drug Administration and other non-listed companies. To achieve the objective of the study, a descriptive and causal comparative research design has been administered. The managerial entrenchment index has been calculated using Principal Component Analysis. The major finding of the study shows that the managerial entrenchment increases as the percentage of CEO ownership rises. There exists positive association of managerial entrenchment and CEO percent ownership which suggests that increase in equity holding by CEO or top executives leads to lower shareholder rights or higher managerial entrenchment.

Keywords: Managerial Entrenchment, CEO Ownership, Capital Structure

JEL Classification: G32, G34

Suggested Citation

Pokharel, Post Raj, Managerial Entrenchment and Capital Structure Decision: A Case of Nepal (August 17, 2013). Pokharel P.R. (2013) Managerial Entrenchment and Capital Structure Decision: A Case of Nepal. NRB ECONOMIC REVIEW Vol. 25-2, p 78-89, Available at SSRN: https://ssrn.com/abstract=3675186

Post Raj Pokharel (Contact Author)

Harvard Pharmaceuticals P. Ltd. ( email )

Ratnanagar-14
Chitwan, Bagmati 44200
Nepal
9845331778 (Phone)

HOME PAGE: http://www.postrajpokharel.wordpress.com

Kathmandu University School of Management ( email )

Boston International College ( email )

Bharatpur, Chitwan, Nepal
Nepal

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