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Executive pay inefficiencies in the financial sector

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Title Information
Executive pay inefficiencies in the financial sector

Title Information:Alternative


Name:Personal
Barton, Haley Role :Text(marcrelator)
creator

Name:Personal
Role :Text(marcrelator)
thesis advisor

Name:Personal
Role :Text
committee member

Name:Corporate
Department of Economics and Business Role :Text(marcrelator)
sponsor

Name:Corporate
Colorado College Role :Text
degree grantor

typeOfResource
text
Origin Information Place :Text
Colorado Springs, Colorado
Colorado College (keyDate="yes")
2010
2010

genre(marcgt)
thesis
Language :Text
English

Physical Description
89 pages : illustrations
reformatted digital

abstract
The 2008 financial crisis has left researchers investigating the inefficiencies that prompted the collapse of the credit and investment markets. This study considers the implications of excessive executive pay on capital structure during the years 2005 through 2007. The hypothesis proposes that for firms in the financial sector, executives awarded generous compensation packages compared to salary implemented a higher use of debt in their firm's capital structure. Agency theory, capital structure composition, the Efficient Market Hypothesis, and behavioral finance principles represent key economic theories supporting the hypothesis. The study examines data on 31 firms in the financial sector and 31 firms in the manufacturing sector to empirically test the relationship between executive pay and leverage. Cross-sectional analysis of nine models reveals that compensation is a significant determinant of a firm's total debt-to-total assets ratio for the financial sector, while the manufacturing sector yielded insignificant findings. The results further evidence that within the financial sector, the greatest relationship between compensation and leverage occurred when a one- or two-year lag between executive pay and the debt ratio was in effect. These findings reveal sources of agency conflicts and behavioral biases within the financial sector during the three years preceding the financial collapse. note
 note:admin
 note:bibliography
Bibliography : pages 79-82 note:thesis(displayLabel="Degree Type")
Bachelor of Arts note:thesis(displayLabel="Degree Name")
bachelor
Subject
Financial leverage

Subject
Executive compensation

Subject
Agency theory

Subject

Subject

Subject Name:Personal

Subject Name:Corporate

Subject

identifier:Local
 accessCondition:useAndReproduction
Copyright restrictions apply. accessCondition:restrictionOnAccess
Record Information languageOfCataloging :Text(ISO639-2B)
English :Code(ISO639-2B)
eng

Location (usage="primary display")
http://hdl.handle.net/10176/coccc:6473