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<p>This paper investigates the impact of CEO inside debt on employee treatment. Our findings suggest that inside debt aligns CEO incentives with the implementation of employee-friendly policies. We employ a variety of methodologies, including cross-sectional regression of time-series averages across firms and industries, Fama-MacBeth regressions, quantile regression models, and instrumental variable techniques to validate our results. The positive effect of CEO inside debt on employee well-being is particularly pronounced in industries that are human capital-intensive, have high labor mobility, and operate in competitive markets where employees are crucial to their business operations. These findings are consistent with the predictions of stakeholder theory and confirm that CEOs inside debt provide CEOs with long-term perspective incentives. Moreover, safety-seeking CEOs tend to incentivize employees through hygiene factors. The friendly employee treatment by high inside debt CEOs leads to better returns for shareholders and improved firm value in the future. The effect of CEO inside debt on employee treatment becomes more pronounced during the COVID-19 pandemic, particularly with respect to human capital development management. Our paper provides novel evidence of how a CEO’s inside debt holding can resolve the conflict of interest between shareholders and employees.</p>

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How do seeking-safety ceos treat their employees?

  • 期刊论文

  • 发表日期：

    2026年1月29日

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  • Chia-Fen F. Tsai,
  • Mao-Wei W. Hung,
  • Feng-Tse T. Tsai

摘要

This paper investigates the impact of CEO inside debt on employee treatment. Our findings suggest that inside debt aligns CEO incentives with the implementation of employee-friendly policies. We employ a variety of methodologies, including cross-sectional regression of time-series averages across firms and industries, Fama-MacBeth regressions, quantile regression models, and instrumental variable techniques to validate our results. The positive effect of CEO inside debt on employee well-being is particularly pronounced in industries that are human capital-intensive, have high labor mobility, and operate in competitive markets where employees are crucial to their business operations. These findings are consistent with the predictions of stakeholder theory and confirm that CEOs inside debt provide CEOs with long-term perspective incentives. Moreover, safety-seeking CEOs tend to incentivize employees through hygiene factors. The friendly employee treatment by high inside debt CEOs leads to better returns for shareholders and improved firm value in the future. The effect of CEO inside debt on employee treatment becomes more pronounced during the COVID-19 pandemic, particularly with respect to human capital development management. Our paper provides novel evidence of how a CEO’s inside debt holding can resolve the conflict of interest between shareholders and employees.