Influence of CEO power on the indebtedness of B3 companies
DOI:
https://doi.org/10.11606/issn.1982-6486.rco.2024.220491Keywords:
Debt, Dimensions of power, CEO powerAbstract
This study analyzes the relationship between CEO power and the indebtedness of companies listed on B3. To that end, Finkelstein's dimensions of power (1992) were adopted as theoretical framework, and an empirical multiple regression model was used, with six equations being estimated according to the debt ratios. In all, 346 companies were analyzed for the period from 2010 to 2021. The investigated dimensions of power were: structural, ownership, prestige, and expert power. Evidence indicates that structural power positively influences indebtedness, while CEOs with more prestige can help improve an organization’s image. Financially expert CEOs keep lower indebtedness. Such evidence can help facilitate CEO admission to companies and show to investors and potential investors the influence these managers can have on companies’ indebtedness.
Downloads
References
Adams, R. B., Almeida, H., & Ferreira, D. (2005). Powerful CEOs and Their Impact on Corporate Performance. Review of Financial Studies, 18(4), 1403–1432.
Avelar, E. A., Souza, A. A., Amaral, H. F., & Reyes, S. T. (2019). Endividamento de Operadoras de Planos de Saúde da Modalidade Autogestão e Regulação da Saúde Suplementar. REAd. Revista Eletrônica de Administração, 25(3), 124-152.
Bach, S. B., & Smith, A. D. (2007). Are powerful CEOs beneficial to post-IPO survival in high technology industries? An empirical investigation. The Journal of High Technology Management Research, 18(1), 31-42.
Bertrand, M., & Schoar, A. (2003). Managing With Style: The Effect of Managers on Firm Policies. The Quarterly Journal of Economics, 118(4), 1169-1208.
Bortoluzzi, D. A., Zakaria, J., Santos, E. A., & Lunkes, R. J. (2016). A influência das características dos executivos de alto escalão sobre a estrutura de capital: Um estudo em empresas listadas na BM&FBOVESPA. Revista ESPACIOS, 37(37), 1-13.
Brito, G. A. S., Corrar, L. J., & Batistella, F. D. (2007). Fatores determinantes da estrutura de capital das maiores empresas que atuam no Brasil. Revista Contabilidade & Finanças, 18(43), 9-19.
Callado, A. A. C., & Siqueira, D. D. (2021). Relaciones compliance de la misión institucional y utilización de indicadores de rendimiento no financieros en empresas listadas en B3. Contabilidad y Negocios, 16(32), 38-59.
Cavalcanti, J. M. M., Paz, R. A. L., Ferreira, B. P., Amaral, H. F., & Mól, A. L. R. (2018). Relevância das características dos CEO’na estrutura de capital de empresas listadas na IBrX-100 da BM&FBovespa. Pretexto, 19(1), 25-42.
Chao, C. C., Hu, M., Munir, Q., & Li, T. (2017). The impact of CEO power on corporate capital structure: New evidence from dynamic panel threshold analysis. International Review of Economics & Finance, 51, 107-120.
Costa, E. M., Nossa, V., Nossa, S. N., & Borgerth, V. M. C. (2019). A Certificação ISO 14001 e o Endividamento das Empresas Brasileiras. Advances in Scientific and Applied Accounting, 12(3), 159-176.
Costa, C. M., Matte, A. M., & Monte-Mor, D. S. (2018). Endividamento e decisões contábeis: a relação não linear entre dívida e qualidade dos lucros. Revista De Contabilidade E Organizações, 12, e137077.
Custódio, C., & Metzger, D. (2014). Financial expert CEOs: CEO’s work experience and firm’s financial policies. Journal of Financial Economics, 114(1), 125-154.
Deangelo, H., & Roll, R. (2015). How stable are corporate capital structures? The Journal of Finance, 70(1), 373–418.
Fang, H., Lee, J.-S., Chung, C.-P., Lee, Y.-H., & Wang, W.-H. (2020). Effect of CEO power and board strength on bank performance in China. Journal of Asian Economics, 69, 101215.
Finkelstein, S. (1992). Power in Top Management Teams: Dimensions, Measurement, and Validation. Academy of Management Journal, 35(3), 505-538.
Florackis, C., & Ozkan, A. (2009). Managerial incentives and corporate leverage: evidence from the United Kingdom. Accounting & Finance, 49(3), 531-553.
Fonseca, A. K., Sirqueira, D., Araújo., & Garcia, I. (2021). Reflexo do planejamento tributário no endividamento das empresas não financeiras listadas na Brasil Bolsa Balcão (B3). Revista de Gestão e Secretariado, 12(2), 225-252.
Fralich, R., & Bitektine, A. (2020). “Invincibles” and “invisibles”: CEO status and the ‘Matthew effect’ in strategic decision-making. Long Range Planning, 53(3), 101887.
Garcia, I. A. S., Medeiros, M. N., & Leite Filho, P. A. M. (2022). Influência do CEO power na probabilidade de sobrevivência das empresas brasileiras de capital aberto da B3. Enfoque: Reflexão Contábil, 41(2), 123-141.
Garcia, I., & Silva, J. (2021). Características pessoais e profissionais dos CEOS e a performance financeira: uma investigação nas empresas não financeiras listadas na B3. Revista Eniac Pesquisa.
Haider, J., & Fang, H.-X. (2018). CEO power, corporate risk taking and role of large shareholders. Journal of Financial Economic Policy, 10(1), 55–72.
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.
Huang, Z., & Gao, W. (2022). The effects of formal and informal CEO power on debt policy persistence. The North American Journal of Economics and Finance, 62, 101748.
Huang, X., Kabir, R., & Thijssen, M. W. P. (2024). Powerful female CEOs and the capital structure of firms. Journal of Behavioral and Experimental Finance, 41, 100879.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 163–231.
Jiraporn, P., Chintrakarn, P., & Liu, Y. (2012). Capital structure, CEO dominance, and corporate performance. Journal of Financial Services Research, 42, 139-158.
Korkeamäki, T., Liljeblom, E., & Pasternack, D. (2017). CEO power and matching leverage preferences. Journal of Corporate Finance, 45, 19(30).
Li, T., Munir, Q., & Abd Karim, M. R. (2017). Nonlinear relationship between CEO power and capital structure: Evidence from China's listed SMEs. International Review of Economics & Finance, 47, 1-21.
Liu, Y., and P. Jiraporn, 2010. “The effect of CEO power on bond ratings and yields”. Journal of Empirical Finance, 17, 744-762.
Locatelli, L., Ramos, F., & Sprenger, K. (2021). Gerenciamento de resultados: análise do poder do ceo na presença de conexões sociais. Revista Catarinense da Ciência Contábil, 20(e3230), 1-18.
Machado, M. A. V., Medeiros, O. R., & Eid Junior, W. (2010). Problemas na mensuração da estrutura de capital: evidências empíricas no Brasil. Brazilian Business Review, 7(1), 24-47.
Nakamura, W. T., Martin, D. M. L., Forte, D., Carvalho Filho, A. F. D., Costa, A. C. F. D., & Amaral, A. C. D. (2007). Determinantes de estrutura de capital no mercado brasileiro: análise de regressão com painel de dados no período 1999-2003. Revista Contabilidade & Finanças, 18(44), 72-85.
Nazir, M. S., Aslam, A., & Nawaz, M. M. (2012). The impact of CEO duality on capital structure: A case from non-financial sector of Pakistan. American Journal of Scientific Research, 56(56), 5-12.
Ntim, C. G., Lindop, S., Thomas, D. A., Abdou, H., & Opong, K. K. (2017). Executive pay and performance: the moderating effect of CEO power and governance structure. The International Journal of Human Resource Management, 30(6), 921–963.
Oliveira, A. P. S., & Garcia, I, A. S. (2024). Influência dos traços de personalidade narcisista dos CEOs no Endividamento das empresas da B3. Revista Contabilidade e Finanças, 35(94), 1-15.
Park, H. D., & Tzabbar, D. (2016). Venture Capital, CEOs’ Sources of Power, and Innovation Novelty at Different Life Stages of a New Venture. Organization Science, 27(2), 233-504.
Perobelli, F., & Famá, R. (2003). Determinantes da estrutura de capital: aplicação a empresas de capital aberto brasileiras. Revista de Administração, 37(3), 33-46.
Pour, K. E. (2015). IPO survival and CEOs’ decision-making power: The evidence of China. Research in International Business and Finance, 33, 247–267.
Quiraque, E. H., Sousa, A. M., & Colauto, R. D. (2022). Rentabilidade e Endividamento em Empresas de Gestão Familiar e não Familiar. In: XXII USP International Conference in Accounting.
Ranti, U. O. (2013). The effects of board size and CEO duality on firms' capital structure: A study of selected listed firms in Nigeria. Asian Economic and Financial Review, 3(8), 1033.
Ruan, W., Tian, G., & Ma, S. (2011). Managerial ownership, capital structure and firm value: Evidence from China’s civilian-run firms. Australasian Accounting, Business and Finance Journal, 5(3), 73-92.
Santos, A. (2004). Análises das alternativas de financiamento: Uso da alavancagem financeira na formação da estrutura de capital na pequena empresa. XI Congresso Brasileiro de Custos.
Souza, T. B., Carraro, W. B. W. H., & Pinheiro, A. B. (2022). Impactos da pandemia de Covid-19 na relação entre estrutura de capital e desempenho: análise das empresas listadas na b3. Revista Ibero-Americana de Estratégia, 21(2), 1-24.
Sprenger, K. B., Kronbauer, C. A., Costa, C. M., & Pereira, T. P. (2020). Powerful CEOs: desenvolvimento de uma métrica de determinação do poder e sua aplicação no âmbito da remuneração executiva. In: USP International Conference in Accounting, 20.
Sun, J., Ding, L., Guo, J. M., & Li, Y. (2015). Ownership, capital structure and financing decision: Evidence from the UK. British Accounting Review.
Thijssen, M. W. P. (2017). CEO characteristics and capital structure of firms: a study of CEO's decision-making power (Master's thesis, University of Twente).
Tongxia, L., Qaiser, M., Karim, A. B. D., & Rahimie, M. (2016). Nonlinear Relationship between CEO Power and Capital Structure: Evidence from China's Listed SMEs. International Review of Economics & Finance, 47, 1-21.
Wang, B. Y., Duan, M., & Liu, G. (2021). Does the power gap between a chairman and CEO matter? Evidence from corporate debt financing in China. Pacific-Basin Finance Journal, 65.
Welch, M., & Jackson, P. (2007). Re-Thinking Internal Communication: A Stakeholder Approach. Corporate Communications: An International Journal, 12, 177-198.
Zhang, Y., Li, J., Deng, Y., & Zheng, Y. (2022). Avoid or approach: How CEO power affects corporate environmental innovation. Journal of Innovation & Knowledge, 7(4), 100250.
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Radja Ferreira Corrêa, Yasmim Clarice Ramos Abreu, Inajá Allane Santos Garcia, Annandy Raquel Pereira da Silva
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
The RCO adopts the Free Open Access policy, under the standard Creative Commons agreement (CC BY-NC-ND 4.0). The agreement provides that:
- Submission of text authorizes its publication and implies commitment that the same material is not being submitted to another journal. The original is considered definitive.
- Authors retain the copyright and grant the journal the right of first publication, with the work simultaneously licensed under the Creative Commons Attribution License which allows the sharing of the work with acknowledgment of authorship and initial publication in this journal.
- Authors are authorized to take additional contracts separately, for non-exclusive distribution of the version of the work published in this journal (e.g. publish in an institutional repository or as a book chapter), with necessary recognition of authorship and initial publication in this journal.
- Authors are allowed and encouraged to publish and distribute their work online (e.g. in institutional repositories or on their personal page) before or during the editorial process, as this can generate productive changes as well as increase the impact and citation of published work (See The Effect of Free Access).
- The journal does not pay copyright to the authors of the published texts.
- The journal's copyright holder, except those already agreed in the Free Open Access Agreement (CC BY-NC-ND 4.0), is the Accounting Department of the Faculty of Economics, Administration and Accounting of Ribeirão Preto of the University of São Paulo.
No submission or publication fees are charged.
Up to 4 authors per article are accepted. Exceptionally duly justified cases may be reviewed by the Executive Committee of the RCO. Exceptional cases are considered as: multi-institutional projects; manuscripts resulting from the collaboration of research groups; or involving large teams for evidence collection, construction of primary data, and comparative experiments.
It is recommended that the authorship be ordered by contribution of each of the individuals listed as authors, especially in the design and planning of the research project, in obtaining or analyzing and interpreting data, and writing. Authors must declare the actual contributions of each author, filling the letter to the editor, at the beginning of the submission, taking responsibility for the information given.
Authors are allowed to change throughout the evaluation process and prior to the publication of the manuscript. The Authors should indicate the composition and final order of authorship in the document signed by all those involved when accepted for publication. If the composition and authoring order is different than previously reported in the system, all previously listed authors should be in agreement.
In the case of identification of authorship without merit or contribution (ghost, guest or gift authorship), the RCO follows the procedure recommended by COPE.
