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Capital structure and staff salary: empirical evidence in Brazil

Author

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  • Duk Young Choi
  • Richard Saito
  • Vinicius Augusto Brunassi Silva

Abstract

This paper analyzes whether the higher the company's financial leverage, the higher the salaries demanded by staff for the embedded financial distress risk. By applying Berk, Stanton and Zechner's (2010) model, we use a2SLS for a sample of 250 non-financial companies listed onBOVESPAfrom 2007 to 2009. Indeed, we find that for each additional 1% of financial leverage, the staff remunerations increase by 0.26%, controlling for Chief Executive Officer (CEO) profile.

Suggested Citation

  • Duk Young Choi & Richard Saito & Vinicius Augusto Brunassi Silva, 2015. "Capital structure and staff salary: empirical evidence in Brazil," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 19(2), pages 249-269.
    • Handle: RePEc:abg:anprac:v:19:y:2015:i:2:1103
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    File URL: https://rac.anpad.org.br/index.php/rac/article/view/1103/1099
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    File URL: https://rac.anpad.org.br/index.php/rac/article/download/1103/1099
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    Cited by:

    1. Peter Vaz da Fonseca & Michele Nascimento Juca & Wilson Toshiro Nakamura, 2020. "Debt Tax Benefits in a High Tax Emerging Market: Evidence from Brazil," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 35-52.

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