UPM Institutional Repository

Does top managers experience affect firms capital structure?


Citation

Tunde, Matemilola Bolaji and Amin Noordin, Bany Ariffin and Wan Ngah, Wan Azman Saini and Md Nassir, Annuar (2018) Does top managers experience affect firms capital structure? Research in International Business and Finance, 45. 488 - 498. ISSN 0275-5319

Abstract

Recently, the importance of traditional firm-specific determinants of capital structure has been challenged. The paper uses the trade-off theory to investigate the managerial experience of top managers as a determinant of capital structure. The paper applies system-generalized method of moments (GMM) which corrects endogeneity problem. Our results reveal that top managers’ experience is positively related to book value measures of capital structure. As top managers’ (CEOs) experience increases, both the book total debt and long-term debt ratios increase. Our results are robust using both the market total debt and long-term debt ratios. Based on the findings, the results suggest that top managers’ experience is a potential determinant of firms’ capital structure. The findings also suggest that experienced top managers maximize the benefits of debt interest tax-shield; top managers can increase firm value.


Download File

[img] Text
Does top managers experience affect firms capital structure.pdf
Download (69kB)

Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
DOI Number: https://doi.org/10.1016/j.ribaf.2017.07.184
Publisher: Elsevier
Keywords: Capital structure; Managerial experience; Trade-off theory; Upper-echelons theory; System GMM
Depositing User: Nurul Ainie Mokhtar
Date Deposited: 08 May 2020 03:06
Last Modified: 08 May 2020 03:06
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1016/j.ribaf.2017.07.184
URI: http://psasir.upm.edu.my/id/eprint/72332
Statistic Details: View Download Statistic

Actions (login required)

View Item View Item