Does top managers experience affect firms capital structure?

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...

Full description

Saved in:
Bibliographic Details
Main Authors: Tunde, Matemilola Bolaji, Amin Noordin, Bany Ariffin, Wan Ngah, Wan Azman Saini, Md Nassir, Annuar
Format: Article
Language:English
Published: Elsevier 2018
Online Access:http://psasir.upm.edu.my/id/eprint/72332/1/Does%20top%20managers%20experience%20affect%20firms%20capital%20structure.pdf
http://psasir.upm.edu.my/id/eprint/72332/
https://www.sciencedirect.com/science/article/abs/pii/S027553191730466X
Tags: Add Tag
No Tags, Be the first to tag this record!
Institution: Universiti Putra Malaysia
Language: English
id my.upm.eprints.72332
record_format eprints
spelling my.upm.eprints.723322020-05-08T03:06:52Z http://psasir.upm.edu.my/id/eprint/72332/ Does top managers experience affect firms capital structure? Tunde, Matemilola Bolaji Amin Noordin, Bany Ariffin Wan Ngah, Wan Azman Saini Md Nassir, Annuar 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. Elsevier 2018-10 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/72332/1/Does%20top%20managers%20experience%20affect%20firms%20capital%20structure.pdf 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 https://www.sciencedirect.com/science/article/abs/pii/S027553191730466X 10.1016/j.ribaf.2017.07.184
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description 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.
format Article
author Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Wan Ngah, Wan Azman Saini
Md Nassir, Annuar
spellingShingle Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Wan Ngah, Wan Azman Saini
Md Nassir, Annuar
Does top managers experience affect firms capital structure?
author_facet Tunde, Matemilola Bolaji
Amin Noordin, Bany Ariffin
Wan Ngah, Wan Azman Saini
Md Nassir, Annuar
author_sort Tunde, Matemilola Bolaji
title Does top managers experience affect firms capital structure?
title_short Does top managers experience affect firms capital structure?
title_full Does top managers experience affect firms capital structure?
title_fullStr Does top managers experience affect firms capital structure?
title_full_unstemmed Does top managers experience affect firms capital structure?
title_sort does top managers experience affect firms capital structure?
publisher Elsevier
publishDate 2018
url http://psasir.upm.edu.my/id/eprint/72332/1/Does%20top%20managers%20experience%20affect%20firms%20capital%20structure.pdf
http://psasir.upm.edu.my/id/eprint/72332/
https://www.sciencedirect.com/science/article/abs/pii/S027553191730466X
_version_ 1669008807607402496