TITLE:
Managerial Power, Capital Structure and Firm Value
AUTHORS:
Chunlong Zhang, Guoliang Zhang
KEYWORDS:
Managerial Power, Capital Structure, Firm Value
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.2 No.12,
December
31,
2014
ABSTRACT: With the reform of our property rights
system, the maturity of the capital market, and the diversification of
corporate financing, the capital structure decision has become the major
concern of financial management. There are numbers of researches on how to
determine the optimal capital structure, what factors affect the capital
structure and what the relationship is like between the capital structure and
the firm value. Built upon prior literature, this paper investigates how managerial
power influences the capital structure with the operation risks and the
characteristics of the directors’ structure. We find that the capital structure
deviates from the optimal level more in firms with stronger managerial power,
and these firms have a stronger discount on such deviation.