Managerial Incentives and the Efficiency of Capital Structure in U.S. Commercial Banking

Arbeitspapier

We extend the literature on the effects of managerial entrenchment to consider how safety-net subsidies and financial distress costs interact with managerial incentives to influence capital structure in U.S. commercial banking. Using cross-sectional data on publicly traded, highest-level U.S. bank holding companies, we find empirical evidence of Marcus? proposition (1984) that there are dichotomous strategies for value maximization?one involving relatively higher financial leverage and the other, lower financial leverage. We find that a less levered capital structure is associated with higher charter value and vice versa. Moreover, differences in charter value result in dichotomous strategies for managerial entrenchment: under-performing, less levered firms hold too little capital while under-performing, more levered firms hold too much.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 2004-01

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Firm Behavior: Theory ; Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Thema: capital allocation ; efficiency ; agency problems ; corporate control ; charter value ; Kapitalstruktur ; Führungskräfte ; Ökonomischer Anreiz ; Agency Theory ; Unternehmenswert ; Bank ; Allokationseffizienz ; Theorie ; Vereinigte Staaten

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Hughes, Joseph P. ; Lang, William W. ; Moon, Choon-Geol ; Pagano, Michael S.
• Ereignis: Veröffentlichung
• (wer): Rutgers University, Department of Economics
• (wo): New Brunswick, NJ
• (wann): 2004

Weitere Informationen

• Handle: http://hdl.handle.net/10419/23180
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ