Quiet Life, CEO Tenure and Leverage Dynamics
6 Jun 2023
13:00 -14:15
Times are shown in local time.
Open to: Members of the University of Cambridge
Room W4.05 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG
United Kingdom
Join our Finance seminar
Speaker: Professor Boris Nikolov, HEC Lausanne, University of Lausanne
About the seminar topic
We document a negative relation between CEO tenure and both corporate leverage and the level of cash flow risk. We rationalise this evidence in a dynamic investment and financing model where a risk averse CEO makes corporate decisions over a finite tenure span. In the model, the CEO enjoys quiet life by under- reacting to both good and bad profitability shocks. The CEO is fired after poor performance but termination decreases with tenure. We structurally estimate the model and show that quiet life is key in rationalising corporate trends over the CEO tenure.
Speaker bio
Boris Nikolov is Full Professor of Finance at HEC Lausanne, University of Lausanne, the Director of the Department of Finance and a Swiss Finance Institute Professor. He was previously a faculty member at the University of Rochester. He holds a PhD in Finance from the University of Lausanne. Professor Nikolov’s primary areas of research are corporate finance and corporate governance. In particular, he works in the area of ESG (environmental, social, and governance) finance where he develops novel corporate governance indices. Recently, he has focused on how Artificial Intelligence can help address corporate finance questions. His research has been published in leading academic journals such as the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies.
A light lunch will be available outside W4.05 from 12:00.
For more information, please contact Eleanor Stefiuk.