Please use this identifier to cite or link to this item: https://hdl.handle.net/10356/102484
Title: Executive stock ownership guidelines and debtholder wealth
Authors: Kang, Jun-Koo
Xu, Limin
Keywords: Stock Ownership Guideline
Debtholder Wealth
Business::Finance
Issue Date: 2018
Source: Kang, J.-K., & Xu, L. (2019). Executive stock ownership guidelines and debtholder wealth. The Accounting Review, 94(2), 267-295. doi:10.2308/accr-52219
Series/Report no.: The Accounting Review
Abstract: We examine how the adoption of executive stock ownership guidelines affects debtholder wealth. We find that guideline adoption is associated with lower loan spreads, fewer collateral requirements, and fewer other restrictive covenants. The results are robust to using an instrumental variables approach. We further find that guideline adoption has a negative effect on bond yield spreads and that after the adoption, firms' risk-taking incentives are lower. These results suggest that guideline adoption benefits debtholders by lowering agency costs of debt. However, we also find that adoption of ownership guidelines is associated with a significant increase in stock prices, and that firms are more likely to increase financial reporting quality in the post-adoption period, indicating that guideline adoption incentivizes managers to improve firm fundamentals, benefiting both shareholders and debtholders.
URI: https://hdl.handle.net/10356/102484
http://hdl.handle.net/10220/49491
ISSN: 0001-4826
DOI: http://dx.doi.org/10.2308/accr-52219
Rights: © 2018 American Accounting Association. All rights reserved.
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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