CEO DOMINANCE AND CORPORATE DELEVERAGING POLICY: EVIDENCE FROM CEO PAY SLICE

In the light of agency issues, this study investigates the impact of CEO dominance on the corporate deleveraging policy. The sample comprises 222 non-financial firms listed at the Pakistan Stock Exchange (PSX) for 2011-2019. The novel method of CEO pay slice is used to capture CEO dominance. The deleveraging policy is divided into two proxies of zero leverage and almost zero leverage. Among all other top executives, the Chief Executive officers play a substantial role in strategic decision-making, particularly financing policy. Dominant CEOs use low leverage, which is consistent with the view of an agency problem. The firm characteristics also affect deleveraging behavior such as ZLD and AZL. Firms with high profits and cash flow abstain from debt financing. The dividend-paying status has increased the firm's propensity to being debtfree. Capital expenditure and fixed assets ratio are inversely related to deleveraging policy. The results highlight strong agency issues in emerging markets like Pakistan, where CEOs are more dominant.