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Adu-Ameyaw, E, Danso, A, Acheampong, S and Akwei, CA (2021) Executive bonus compensation and financial leverage: do growth and executive ownership matter? International Journal of Accounting and Information Management. ISSN 1834-7649
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Abstract
Purpose: This study aims to examine the impact of executive bonus compensation on a firm’s financial leverage policy and the extent to which this compensation–leverage relation is moderated by firm growth and executive ownership.
Design/methodology/approach: Using data from 213 non-financial and non-utility UK FTSE 350 firms for the period 2007–2015, generating a total of 1,784 firm-year observations, panel econometric methods are used to test the model.
Findings: Drawing insights from agency theoretic view, this paper uncovers that managerial cash bonus compensation is negatively and significantly related to financial leverage. However, stock bonus compensation has a positive and significant impact on leverage. This study also observes that compensation–leverage is moderated by both firm growth and executive ownership. The results remain robust to alternative econometric models.
Originality/value: While this paper builds on the risk-motivated argument of executive bonus compensation literature, it is the first – to the best of the knowledge – to explore the bonus compensation-corporate financial leverage and, particularly, examine the extent to which firm growth and corporate executive ownership matter in this relationship.
| Item Type: | Article |
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| Additional Information: | This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact permissions@emerald.com |
| Uncontrolled Keywords: | 0806 Information Systems, 1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment |
| Subjects: | H Social Sciences > HF Commerce > HF5001 Business H Social Sciences > HF Commerce |
| Divisions: | Doctoral Management Studies (from Sep 19) |
| Publisher: | Emerald |
| Date Deposited: | 24 May 2021 09:53 |
| Last Modified: | 04 Sep 2021 05:26 |
| DOI or ID number: | 10.1108/ijaim-09-2020-0141 |
| URI: | https://researchonline.ljmu.ac.uk/id/eprint/15046 |
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