Board Liability Limitation, Indemnification and the Cost of Debt

dc.contributor.authorDallas, George S.
dc.contributor.authorBradley, Michael
dc.contributor.authorChen, Dong
dc.date.accessioned2017-06-08T19:05:10Z
dc.date.available2017-06-08T19:05:10Z
dc.date.issued2010
dc.description.abstractWe document a strong negative relation between the presence of director liability limitation and indemnification-L-index, and the cost of debt. Surprisingly, we find little evidence that firms with higher L-index attracts directors with expertise, the only mechanism through which L-index benefits bondholders based on extant literature. Directors with higher L-index set lower pay-for-performance sensitivity for CEO, which harm bondholders. Unexpectedly, firms with higher L-index seem to take less risk, not more, that may benefit bondholders. After controlling for L-index, G-index is associated with higher cost of debt, which may suggest the beneficial effect of takeovers on bondholders.en_US
dc.genrejournal articlesen_US
dc.identifierdoi:10.13016/M20859
dc.identifier.citationDallas, GS, Bradley, M, Chen, D (2010) Board Liability Limitation, Indemnification and the Cost of Debt.en_US
dc.identifier.uri10.2139/ssrn.1535723
dc.identifier.urihttp://hdl.handle.net/11603/4002
dc.language.isoen_USen_US
dc.relation.isAvailableAtUniversity of Baltimore
dc.titleBoard Liability Limitation, Indemnification and the Cost of Debten_US
dc.typeTexten_US

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