Liquidation threat: Behavior of CEO entrenchment

Chien-Chiang Lee () and Chih-Wei Wang

Finance Research Letters, 2022, vol. 47, issue PA

Abstract: This study investigated the effect of CEO entrenchment on a firm's debt maturity choice. We examine US firms using the 2006–2017 sample period and find that entrenched managers choose debt with longer maturity financing to avoid early liquidation. Additionally, we detect a possible channel between entrenchment and debt maturity using shareholder-initiated proposals. Finally, firms with high (low) informational opacity (credit quality) will force entrenched managers to extend their debt maturity. We provide useful policy implications for shareholders and investors and new insights into CEO entrenchment, debt maturity, and shareholder-initiated proposals.

Keywords: CEO entrenchment; Shareholder-initiated proposal; Debt maturity; Agency theory (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pa:s1544612322002094

DOI: 10.1016/j.frl.2022.102949

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