Description:
This paper examines whether the relative power in the CEO–CFO relationship influences the corporate debt maturity structure. In particular, we define CFO co-option as the CFO appointed after the incumbent CEO assumed office. We hypothesize that firms with co-opted CFOs face greater pressure from CEOs and have allegiance to them. We find that firms with co-opted CFOs have a positive effect on longer-term maturity debt and this effect is more pronounced among firms with weak external monitoring, CEOs near retirement, and financially unconstrained firms. A number of robustness tests are also consistent with our proposition. This paper contributes to the literature on how dynamics between executives can impact corporate policies