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Managerial Ownership, Takeover Defenses, And Debt Financing


  • Şenay Ağca
  • Sattar A. Mansi


We examine the effect of agency conflicts on debt financing and show that managerial ownership and its interaction with takeover defenses affect these decisions. We find that (1) the relation between leverage and takeover defenses becomes insignificant when we control for the interaction of these defenses with managerial ownership, and (2) firms with large managerial ownership operate at high debt levels unless they have a large number of takeover defenses. Therefore, a two-dimensional aspect of governance that includes the interaction between managerial ownership and takeover defenses is useful in understanding the effect of agency conflicts on firms' debt financing decisions. (c) 2008 The Southern Finance Association and the Southwestern Finance Association.

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  • Şenay Ağca & Sattar A. Mansi, 2008. "Managerial Ownership, Takeover Defenses, And Debt Financing," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 31(2), pages 85-112.
  • Handle: RePEc:bla:jfnres:v:31:y:2008:i:2:p:85-112

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    Cited by:

    1. Christopher F. Baum & Atreya Chakraborty & Liyan Han & Boyan Liu, 2012. "The effects of uncertainty and corporate governance on firms’ demand for liquidity," Applied Economics, Taylor & Francis Journals, vol. 44(4), pages 515-525, February.
    2. de La Bruslerie, Hubert & Latrous, Imen, 2012. "Ownership structure and debt leverage: Empirical test of a trade-off hypothesis on French firms," Journal of Multinational Financial Management, Elsevier, vol. 22(4), pages 111-130.
    3. Lookman, Aziz A., 2009. "Bank borrowing and corporate risk management," Journal of Financial Intermediation, Elsevier, vol. 18(4), pages 632-649, October.
    4. Bill Francis & Iftekhar Hasan & Liang Song, 2012. "Are Firm- And Country-Specific Governance Substitutes? Evidence From Financial Contracts In Emerging Markets," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 35(3), pages 343-374, September.
    5. Hubert De La Bruslerie & Imen Latrous, 2012. "Ownership Structure and Debt Leverage: Empirical Test of a Trade-Off Hypothesis on French Firms," Post-Print halshs-00674250, HAL.

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