Capital structures and compensation policies

Kais Dachraoui and Georges Dionne ()
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Kais Dachraoui: HEC Montreal, Canada Research Chair in Risk Management

No 99-3, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: We study the interactions between leverage and compensation policies within firms. Recent works have shown that there exists heterogeneity in compensation policies across firms (Abowd, Kramarz and Margolis, 1999, and Margolis, 1996). We introduce firms' capital structure in order to explain part of this heterogeneity. Estimation results show, in fact, that the composition of the labor force affects significantly firms' leverage which in turn affects the compensation policy of age reduce the estimated trade-off between starting compensations and returns to seniority. These results support strong interactions between the financial market and the labor market explained by asymmetrical information in both markets.

Keywords: Capital structure; compensation policy; labor; capital structure; leverage (search for similar items in EconPapers)
JEL-codes: D80 G32 J33 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2001-12-01
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Related works:
Working Paper: Capital structures and compensation policies (1999)
Working Paper: Capital Structure and Compensation Policies (1999)
Working Paper: Capital Structures and Compensation Policies (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:1999_003

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