Investigating the Impact of Managerial Entrenchment on Corporate Financial Structure: Evidence from Nigeria

Benjamin Ighodalo Ehikioya (), Alexander Ehimare Omankhanlen (), Cordelia Onyinyechi Omodero () and Ada Mac-Ozigbo ()

Asian Economic and Financial Review, 2021, vol. 11, issue 7, 563-574

Abstract: Finance decisions have been some of the most significant but challenging decisions for corporate organizations in recent times. Against this backdrop, this study examines the impact of managerial entrenchment on the financial structure of companies listed on the Nigerian Stock Exchange (NSE). The study employed a regression technique to analyze data from 2010 to 2019. The results reveal evidence that managerial entrenchment is essential to explain the proportion of debt in listed firms' capital structure in Nigeria. The significant negative connection between executive shareholding, CEOs’ tenure, and debt, suggests managerial entrenchment's power to alleviate agency problems and pressure the managers to deploy optimal financial structure in Nigerian listed firms. However, CEO duality, board composition and board size reveal a positive connection with the debt ratio of listed firms in Nigeria. These findings offer empirical evidence on the importance of adopting a mix of monitoring and control mechanisms during decision-making to ensure optimal capital structure and protect stakeholders' interests.

Keywords: Corporate governance; Capital structure; Managerial entrenchment; Firm performance; Nigerian Stock Exchange; Debt; CEO duality. (search for similar items in EconPapers)
Date: 2021
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