Download or read book Secured Debt and Managerial Incentives written by Michael J. Alderson and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial theory holds that firms can control agency costs through the use of short-term and secured debt. We examine the relation between the use of secured debt and the incentive of the manager to increase the risk of the firm, as measured by vega. We find that firms utilize secured debt to a lesser extent when managerial volatility sensitivity is higher. Our results suggest that these same firms employ short-term debt as the primary tool to control risk-shifting. Managers with a high risk appetite avoid secured debt, but appear to do so without compromising the interests of the shareholders.