The paper "Managerial Entrenchment and Capital Structure Decisions" by Philip G. Berger, Eli Ofek, and David L. Yermack examines the relationship between managerial entrenchment and firms' capital structures. The authors find that entrenched CEOs tend to avoid debt, as evidenced by lower leverage levels when CEOs face less pressure from ownership and compensation incentives or active monitoring. They also analyze changes in leverage following events that reduce managerial security, such as unsuccessful tender offers, involuntary CEO replacements, and the addition of major stockholders to the board. These events are associated with significantly higher leverage levels. The study suggests that managers may increase leverage to protect their positions, reduce performance pressures, or signal commitment to value-increasing changes. The findings highlight the influence of managerial entrenchment on capital structure choices and provide insights into the dynamics of corporate governance and financial decision-making.The paper "Managerial Entrenchment and Capital Structure Decisions" by Philip G. Berger, Eli Ofek, and David L. Yermack examines the relationship between managerial entrenchment and firms' capital structures. The authors find that entrenched CEOs tend to avoid debt, as evidenced by lower leverage levels when CEOs face less pressure from ownership and compensation incentives or active monitoring. They also analyze changes in leverage following events that reduce managerial security, such as unsuccessful tender offers, involuntary CEO replacements, and the addition of major stockholders to the board. These events are associated with significantly higher leverage levels. The study suggests that managers may increase leverage to protect their positions, reduce performance pressures, or signal commitment to value-increasing changes. The findings highlight the influence of managerial entrenchment on capital structure choices and provide insights into the dynamics of corporate governance and financial decision-making.