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...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2018
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| Online Access: | http://psasir.upm.edu.my/id/eprint/72332/ http://psasir.upm.edu.my/id/eprint/72332/1/Does%20top%20managers%20experience%20affect%20firms%20capital%20structure.pdf |
| _version_ | 1848857092489740288 |
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| author | Tunde, Matemilola Bolaji Amin Noordin, Bany Ariffin Wan Ngah, Wan Azman Saini Md Nassir, Annuar |
| author_facet | Tunde, Matemilola Bolaji Amin Noordin, Bany Ariffin Wan Ngah, Wan Azman Saini Md Nassir, Annuar |
| author_sort | Tunde, Matemilola Bolaji |
| building | UPM Institutional Repository |
| collection | Online Access |
| 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. |
| first_indexed | 2025-11-15T11:52:03Z |
| format | Article |
| id | upm-72332 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T11:52:03Z |
| publishDate | 2018 |
| publisher | Elsevier |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-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 |
| spellingShingle | Tunde, Matemilola Bolaji Amin Noordin, Bany Ariffin Wan Ngah, Wan Azman Saini Md Nassir, Annuar Does top managers experience affect firms capital structure? |
| title | 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_short | Does top managers experience affect firms capital structure? |
| title_sort | does top managers experience affect firms capital structure? |
| url | http://psasir.upm.edu.my/id/eprint/72332/ http://psasir.upm.edu.my/id/eprint/72332/ http://psasir.upm.edu.my/id/eprint/72332/ http://psasir.upm.edu.my/id/eprint/72332/1/Does%20top%20managers%20experience%20affect%20firms%20capital%20structure.pdf |