Impact of Managerial Entrenchment on Financial Flexibility and Leverage of Small Public Firms: Policy Implications for Global Economic Crisis

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Akwasi A. Ampofo
Akwasi A. Ampofo
2
Reza Barkhi
Reza Barkhi
1 University of Connecticut, Virginia Tech

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This paper examines the impact of managerial entrenchment on financial flexibility, and financial leverage decisions of small public firms compared to medium and large firms. We group firms into market capitalization quartiles where small public firms are within the first, medium firms are between the first and second, and large firms are above the third quartile. Results show that entrenched managers in small firms hold significantly less excess cash than entrenched managers in medium or large firms. Small public firms borrow significantly more money using short-term maturity compared to medium and large size firms, which borrow less money using long-term maturities. Compared to pre-2008 crisis levels, most firms borrowed more money and held more excess cash during and after the global economic crisis, though small firms had limited access to cheap long-term funding compared to medium and large firms. Managers adopted more antitakeover practices after the 2008 global crisis and they became more entrenched. Results have economic and policy implications.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Akwasi A. Ampofo. 2026. \u201cImpact of Managerial Entrenchment on Financial Flexibility and Leverage of Small Public Firms: Policy Implications for Global Economic Crisis\u201d. Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 23 (GJMBR Volume 23 Issue C3): .

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Flexible finance impacts and implications.
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Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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GJMBR-C Classification: JEL Code: G31 G32 G39
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v1.2

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October 3, 2023

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English

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This paper examines the impact of managerial entrenchment on financial flexibility, and financial leverage decisions of small public firms compared to medium and large firms. We group firms into market capitalization quartiles where small public firms are within the first, medium firms are between the first and second, and large firms are above the third quartile. Results show that entrenched managers in small firms hold significantly less excess cash than entrenched managers in medium or large firms. Small public firms borrow significantly more money using short-term maturity compared to medium and large size firms, which borrow less money using long-term maturities. Compared to pre-2008 crisis levels, most firms borrowed more money and held more excess cash during and after the global economic crisis, though small firms had limited access to cheap long-term funding compared to medium and large firms. Managers adopted more antitakeover practices after the 2008 global crisis and they became more entrenched. Results have economic and policy implications.

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Impact of Managerial Entrenchment on Financial Flexibility and Leverage of Small Public Firms: Policy Implications for Global Economic Crisis

Akwasi A. Ampofo
Akwasi A. Ampofo University of Connecticut, Virginia Tech
Reza Barkhi
Reza Barkhi

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