Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size

Objective: The main purpose of this study is to investigate the relationship between CEO power and capital structure decisions with an emphasis on the moderating role of firms size in listed companies in Tehran Stock Exchange. Methods: In order to achieve the research purpose, the power of the CEO h...

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Autores principales:	Shokrollah Khajavi, Mehran Jahandoust Marghoub, Soraya Weysihesar
Formato:	article
Lenguaje:	FA
Publicado:	University of Tehran 2021
Materias:	firm size principal component analysis capital structure ceo power Finance HG1-9999
Acceso en línea:	https://doaj.org/article/26e11a6449654d74884dfe3e7a11ea71
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spelling	oai:doaj.org-article:26e11a6449654d74884dfe3e7a11ea712021-11-14T06:00:48ZInvestigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size1024-81532423-537710.22059/frj.2020.301393.1007015https://doaj.org/article/26e11a6449654d74884dfe3e7a11ea712021-05-01T00:00:00Zhttps://jfr.ut.ac.ir/article_81939_6dabf4dbe6c82f85a096ad7a56c0b2e2.pdfhttps://doaj.org/toc/1024-8153https://doaj.org/toc/2423-5377Objective: The main purpose of this study is to investigate the relationship between CEO power and capital structure decisions with an emphasis on the moderating role of firms size in listed companies in Tehran Stock Exchange. Methods: In order to achieve the research purpose, the power of the CEO has been measured using the principal component analysis method and using the CEO task duality criteria, CEO tenure and CEO ownership percentage. Also, benchmarks such as book value leverage, market value leverage, short-term leverage and long-term leverage were used as capital structure representatives. Research hypotheses based on a statistical sample consisting of 106 companies during an 8-year period from 2011 to 2018 were tested using multivariate regression models and panel data method Results: In general, the results show that there is no significant nonlinear relationship between CEO power and book value leverage and short-term leverage. Also, there is a significant nonlinear (U inverse) relationship between CEO power and market value leverage, and there is a significant linear (positive) relationship between CEO power and long-term leverage. In addition, in large corporations, there is a significant nonlinear (U shape) relationship between CEO power and book value leverage, market value leverage and short-term leverage, and there is a significant nonlinear (U inverse) relationship between CEO power and long-term leverage. Conclusion: The results showed that the power of the CEO is one of the factors influencing the capital structure of companies. In other words, the effect of the CEO's power on the lever is complex, and it is simply incorrect to state a simple linear relationship. Also, the size of the company affects the relationship between the power of the CEO and the capital structure. Thus, in general, the results indicate that the powerful executives of large corporations do not take the same approach in their financing decisions.Shokrollah KhajaviMehran Jahandoust MarghoubSoraya WeysihesarUniversity of Tehranarticlefirm sizeprincipal component analysiscapital structureceo powerFinanceHG1-9999FAتحقیقات مالی, Vol 23, Iss 1, Pp 40-63 (2021)
institution	DOAJ
collection	DOAJ
language	FA
topic	firm size principal component analysis capital structure ceo power Finance HG1-9999
spellingShingle	firm size principal component analysis capital structure ceo power Finance HG1-9999 Shokrollah Khajavi Mehran Jahandoust Marghoub Soraya Weysihesar Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
description	Objective: The main purpose of this study is to investigate the relationship between CEO power and capital structure decisions with an emphasis on the moderating role of firms size in listed companies in Tehran Stock Exchange. Methods: In order to achieve the research purpose, the power of the CEO has been measured using the principal component analysis method and using the CEO task duality criteria, CEO tenure and CEO ownership percentage. Also, benchmarks such as book value leverage, market value leverage, short-term leverage and long-term leverage were used as capital structure representatives. Research hypotheses based on a statistical sample consisting of 106 companies during an 8-year period from 2011 to 2018 were tested using multivariate regression models and panel data method Results: In general, the results show that there is no significant nonlinear relationship between CEO power and book value leverage and short-term leverage. Also, there is a significant nonlinear (U inverse) relationship between CEO power and market value leverage, and there is a significant linear (positive) relationship between CEO power and long-term leverage. In addition, in large corporations, there is a significant nonlinear (U shape) relationship between CEO power and book value leverage, market value leverage and short-term leverage, and there is a significant nonlinear (U inverse) relationship between CEO power and long-term leverage. Conclusion: The results showed that the power of the CEO is one of the factors influencing the capital structure of companies. In other words, the effect of the CEO's power on the lever is complex, and it is simply incorrect to state a simple linear relationship. Also, the size of the company affects the relationship between the power of the CEO and the capital structure. Thus, in general, the results indicate that the powerful executives of large corporations do not take the same approach in their financing decisions.
format	article
author	Shokrollah Khajavi Mehran Jahandoust Marghoub Soraya Weysihesar
author_facet	Shokrollah Khajavi Mehran Jahandoust Marghoub Soraya Weysihesar
author_sort	Shokrollah Khajavi
title	Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
title_short	Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
title_full	Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
title_fullStr	Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
title_full_unstemmed	Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size
title_sort	investigating the relationship between ceo power and capital structure: emphasizing the role of firms size
publisher	University of Tehran
publishDate	2021
url	https://doaj.org/article/26e11a6449654d74884dfe3e7a11ea71
work_keys_str_mv	AT shokrollahkhajavi investigatingtherelationshipbetweenceopowerandcapitalstructureemphasizingtheroleoffirmssize AT mehranjahandoustmarghoub investigatingtherelationshipbetweenceopowerandcapitalstructureemphasizingtheroleoffirmssize AT sorayaweysihesar investigatingtherelationshipbetweenceopowerandcapitalstructureemphasizingtheroleoffirmssize
_version_	1718429885899210752

Investigating the Relationship between CEO Power and Capital Structure: Emphasizing the Role of Firms Size

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