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Lease Financing and Corporate Governance

Author

Listed:
  • Sara H. Robicheaux
  • Xudong Fu
  • James A. Ligon

Abstract

Lease financing is a well-recognized mechanism for reducing the agency costs of debt. This study examines whether firms that attempt to control the agency costs of equity through strong governance structures, including Chief Executive Officer compensation alignment and board structure, are more likely to use an agency cost reducing debt structure, such as leasing. For a sample of large firms, we find that firms who use more incentive compensation and have more outside directors also tend to use more lease financing, suggesting these agency cost reducing measures are complements. Copyright (c) 2008, The Eastern Finance Association.

Suggested Citation

  • Sara H. Robicheaux & Xudong Fu & James A. Ligon, 2008. "Lease Financing and Corporate Governance," The Financial Review, Eastern Finance Association, vol. 43(3), pages 403-437, August.
  • Handle: RePEc:bla:finrev:v:43:y:2008:i:3:p:403-437
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1540-6288.2008.00200.x
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    Cited by:

    1. Anna Białek-Jaworska & Aneta Dzik-Walczak & Natalia Nehrebecka, 2015. "Kiedy firmy sięgają po leasing?," Gospodarka Narodowa, Warsaw School of Economics, issue 2, pages 113-144.
    2. repec:eee:ecofin:v:42:y:2017:i:c:p:487-503 is not listed on IDEAS
    3. Devos, Erik & Rahman, Shofiqur, 2014. "Location and lease intensity," Journal of Corporate Finance, Elsevier, vol. 29(C), pages 20-36.
    4. Anna Białek-Jaworska & Natalia Nehrebecka, 2016. "Determinants of Polish Enterprises' Propensity to Lease," Working Papers 2016-07, Faculty of Economic Sciences, University of Warsaw.

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