Capital Structure and Managerial Compensation: The Effects of Renumeration Seniority

Research, Preprint OPEN
Calcagno, R.; Renneboog, L.D.R.;
  • Publisher: Finance
  • Subject: leverage | remuneration contracts | seniority of claims;remuneration contracts;financial distress;insolvency;leverage | seniority of claims; remuneration contracts; financial distress; insolvency; leverage | financial distress | K12 - Contract Law | seniority of claims | insolvency | G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance | G33 - Bankruptcy ; Liquidation | G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill
    • jel: jel:G34 | jel:G33 | jel:G32 | jel:K12

We show that the relative seniority of debt and managerial compensation has important implications on the design of remuneration contracts.Whereas the traditional literature assumes that debt is senior to remuneration, we show that this is frequently not the case accord... View more
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