Can managerial discretion explain observed leverage ratios

By Erwan Morellec. 2001

338 citations recorded by the source corpus.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/c88128bce6e9f5944135eaff75bafa2946a80af1

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In Strategy and Management

Citations in the corpus

Financing and takeovers (2008, positive): “…we abstract from potential agency conflicts between managers and shareholders by assuming that the incentives of these two groups are perfectly aligned (see Zwiebel, 1996; Morellec, 2004, for an analysis of the relation between agency conflicts, financing decisions, and control transactions).”
Firm Age, Corporate Governance, and Capital Structure Choices (2018, positive): “…as suggesting that as a firm grows older, entrenched managers are able to let their risk preferences play a greater role in their firm’s capital structure decisions (e.g., Bertrand and Mullainathan (2003), Morellec (2004), Lewellen (2006), Gow, Kaplan, Larcker, and Zakolyukina (2016), etc.).”
Stock Returns in Mergers and Acquisitions (2008, positive): “Management has complete information regarding the potential benefits of the takeover, but cannot communicate this information to shareholders [as in Carlson, Fisher and Giammarino (2005b) and Morellec and Zhdanov (2005)].”
Leverage decision and manager compensation with choice of effort and volatility (2004, background): “Our model is also complementary to the results of Morellec (2003), who presents a comprehensive model with taxes, possible default, and agency problems, and concludes that optimal leverage tends to be low, as observed in practice.”
Capital Structure, CEO Dominance, and Corporate Performance (2011, neutral): “Second, we also make contributions to a significant body of literature that employs agency theory to explain capital structure (Hirshleifer and Thakor, 1989; Harris and Raviv, 1990; Stulz, 1990; Jensen and Meckling, 1976, Jensen, Jensen 1986a, b; Williamson, 1988; Diamond, 1989; Morellec, 2004).”
A Model of Dynamic Compensation and Capital Structure (2011, positive): “5 Technically speaking, in the aforementioned papers, either the volatility choice in Leland (1998) which is observable in Brownian setting, or the over-investment (observable) decision in Morellec (2004), can be easily resolved by optimal contracting.”
The Aggregate Dynamics of Capital Structure and Macroeconomic Risk (2010, result): “…structure model inside a consumption-based model with intertemporal macroeconomic risk and an Epstein-Zin-Weil representative agent, especially if other imperfections such as partial tax 16See, e.g., Goldstein, Ju, and Leland (2001), Morellec (2004), and Ju, Parrino, Poteshman, and Weisbach (2005).”
Human Capital, Bankruptcy and Capital Structure (2007, positive): “Morellec (2004) extends the model by Zwiebel (1996), and derives a continuous-time model of an entrenched employee who may find it optimal to issue debt to avoid a hostile takeover.”
The choice of corporate liquidity and corporate governance (2009, background): “14As pointed out by Morellec (2004), this assumes there are more substitutes for the alternative manager without rm-specic human capital.”
Capital Structure Decisions: Which Factors are Reliably Important? (2009, neutral): “How do we interpret this surprising finding? Recall that Barclay, Morellec, and Smith (2006) argue book-leverage is backwards-looking while market-leverage is forwards looking.”
Managerial Traits and Capital Structure Decisions (2008, neutral): “An exception is Morellec (2004), who develops a dynamic model when self-interested managers make financing decisions to avoid control challenges.”
Horses and Rabbits? Trade-Off Theory and Optimal Capital Structure (2005, background): “8 In an elegant unified model incorporating tax shields and default costs of debt financing, as well as managerial incentives for empire-building, Morellec (2004) has shown that managerial discretion may also explain the observed low leverage ratios.”
Dynamic Investment, Capital Structure, and Debt Overhang (2015, background): “This explains why firms with more growth options may take a lower leverage (Smith and Watts (1992) and Rajan and Zingales (1995)).”
Trade-Off and Pecking Order Theories of Debt (2007, methodology): “Eventually, dynamic agency models such as Morellec (2004) and Atkeson and Cole (2005) and dynamic trade-off models such as those discussed in Section 2.3.2 are likely to go a long distance towards closing theoretical gaps between the various approaches to leverage.”
Does Stakeholder Management have a Dark Side? (2009, background): “managers' opportunities to follow personal objectives (Morellec, 2004), efficiency and financial perfor mance could be perceived as secondary to stake holders' needs in SM committed firms.”