Are Debt and Incentive Compensation Substitutes in Controlling the Free Cash Flow Agency Problem?
研究债务和经理人股票期权在缓解自由现金流代理问题中的替代作用，发现忽略替代性和内生性会低估两者的治理效果，且该效应在代理问题更严重的公司中更显著。
This paper investigates the governance implications of a firm's capital structure and managerial incentive compensation in controlling the free cash flow agency problem. The results suggest: debt and executive stock options act as substitutes in attenuating a firm's free cash flow problem; failure to incorporate the substitutability and endogeneity leads to underestimates of the magnitude and economic implication of the disciplinary role of both mechanisms; firm characteristics differ across the prevalence of debt usage versus option usage, suggesting the heterogeneity in the costs and benefits of the monitoring devices; and all the above effects are more pronounced in firms that tend to have more severe agency problem.