University of Twente Student Theses


CEO characteristics and capital structure of firms : a study of CEO's decision-making power

Thijssen, M.W.P. (2017) CEO characteristics and capital structure of firms : a study of CEO's decision-making power.

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Abstract:This thesis examines the moderating effect of CEO power on the relationship between, on the one hand, the inherent CEO characteristics gender, age, and functional experience and, on the other hand, financial book and market leverage. This thesis extends the literature by documenting that different power dimensions can have opposite moderating effects for these inherent CEO characteristics. A total of 230 firms, corresponding to 418 unique CEOs, over 9 years (2007 - 2015) is extracted from the Orbis database, in addition to DEF-14a proxy filings, to conduct the analysis. This thesis utilizes various econometric estimation techniques to find the following results. First, a negative interaction between female CEOs and structural power which is positive when interacted with prestige power. Second strong support for the positive interaction between age and ownership power as well as the negative interaction between age and structural power. Lastly, some support is also found for the negative interaction between financial expertise and ownership power which is positive for financial expertise and structural power. The results are fairly robust against often cited problems of self-selection and endogenous-matching using a variety of econometric estimation techniques. The results in this thesis may be of interest to shareholders, and policymakers might leverage the findings to improve the performance of CEOs and their potential under-diversified influence in the top management team. Future research is needed to understand differences stemming from various power dimensions, independent of the preferences imposed through gender, age, and functional experience.
Item Type:Essay (Master)
University of Stavanger, Nederland
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:83 economics, 85 business administration, organizational science
Programme:Business Administration MSc (60644)
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