CEO ownership, leasing, and debt financing

In this empirical study, we examine the effect of CEO stock ownership on le asing. Although financial contracting theory suggests that ownership struct ure is potentially an important determinant of debt financing and leasing, its effect on leasing has not been previously explored. We also control for explanatory factors that have been found important in other leasing studie s. We find that CEO ownership is positively related to companies' leasing a nd debt financing activity, consistent with contracting theory. This sugges ts that CEOs with large ownership stakes engage in more leasing to reduce t heir exposure to obsolescence and other asset-specific risks.