Abstract

References (41)

Beta

Citations (1)

Beta

Download | Share | Email | Add to Briefcase | Buy Hard Copy

Corporate Boards and the Leverage and Debt Maturity Choices

Jarrad Harford
University of Washington

Kai Li
University of British Columbia - Sauder School of Business; China Academy of Financial Research (CAFR)

Shelly Zhao
Kent State University - Department of Finance

February 2007

Abstract:
Debt, and in particular, short-term debt have the potential to discipline managers. We examine the role of the board in making financing decisions that provide this discipline. Specifically, given a firm's characteristics, we predict that stronger boards will force the firm to hold more debt and more short-term debt. Employing a rich dataset of board characteristics and controlling for other aspects of a firm's corporate governance, we find support for these hypotheses. Our simple measure of director power is a robust and promising measure of internal governance.

Keywords: leverage, debt maturity, board effectiveness, incentive alignment, director power, governance

JEL Classifications: G32, G34

Working Paper Series

Date posted: March 16, 2006 ; Last revised: September 08, 2009

Suggested Citation

Harford, Jarrad, Li, Kai and Zhao, Shelly, Corporate Boards and the Leverage and Debt Maturity Choices (February 2007). Available at SSRN: http://ssrn.com/abstract=891300

Export to: Export Citation What's this?

Contact Information

Jarrad Harford (Contact Author) University of Washington ( email ) Box 353200 Seattle, WA 98195-3200 United States 206-543-4796 (Phone) 206-543-7472 (Fax) HOME PAGE: http://faculty.washington.edu/jarrad/
Kai Li University of British Columbia - Sauder School of Business ( email ) 2053 Main Mall Vancouver, BC V6T 1Z2 V6T 1Z2 Canada 604-822-8353 (Phone) 604-822-4695 (Fax) HOME PAGE: http://finance.sauder.ubc.ca/~kaili
China Academy of Financial Research (CAFR) 1954 Huashan Road Shanghai P.R.China, 200030 China
Xinlei Zhao Kent State University - Department of Finance ( email ) College of Business Administration P.O. Box 5190 Kent, OH 44242-0001 United States 330-672-1213 (Phone) 330-672-9806 (Fax)