Seeking Safety: The Relation between CEO Inside Debt Holdings and the Riskiness of Firm Investment and Financial Policies

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Executive Compensation: A Modern Primer (2016, neutral): “Debt-aligned executives manage the firm more conservatively, as measured by the firm’s lower distance to default (Sundaram and Yermack 2007), and lower stock-return volatility, R&D expenditures, and financial leverage (Cassell et al. 2012, also using the income tax instrument).”
The effect of CEO inside debt holdings on financial reporting quality (2015, background): “So following Cassell et al. (2012), I assume that CEOs do not invest their deferred compensation in the common stocks.”
Capital structure, executive compensation, and investment efficiency (2013, methodology): “This result is consistent with the agency theory prediction that managers with more debt-like components in their compensation package will prefer a more conservative investment policy (see, e.g., Jensen and Meckling, 1976; Sundaram and Yermack, 2007; Cassell et al., 2012).”
Firm Cash Holdings and CEO Inside Debt (2013, background): “For example, Lee and Tang (2011) and Cassell et al. (2012) find that firm leverage, R&D expenditures, and stock return volatility are decreasing in inside debt, while firm diversification is increasing in inside debt.”