On the Relevance of Ownership Structure in Determining the Maturity of Debt
42 Pages Posted: 10 Mar 2008
Date Written: January 2008
Abstract
I investigate whether ownership by blockholders is an important determinant of corporate debt maturity. Using GMM methodology to control for the endogeneity of all regressors, I document an economically significant negative link between short term debt and ownership by blockholders. This suggests that, in trading off costs and benefits of short term debt, less diversified shareholders are more concerned about liquidity risk than underinvestment costs. Additionally, I report strong evidence that the link with insider ownership is non-linear. Finally, I find a negative relation between short term debt and board structure which indicates that these are alternative agency control mechanisms.
Keywords: debt maturity, ownership structure, corporate governance, endogeneity, GMM
JEL Classification: G32, G34
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Paper statistics
Recommended Papers
-
By Grzegorz Pawlina and Luc Renneboog
-
By Grzegorz Pawlina and Luc Renneboog
-
The Managerial Labour Market and the Governance Role of Shareholder Control Structures in the UK
-
By Hyun-han Shin and Yong H. Kim
-
The Underinvestment and Overinvestment Hypotheses: An Analysis Using Panel Data
By Arthur Morgado and Julio Pindado
-
Investment and Internal Finance: Asymmetric Information or Managerial Discretion?
By Abe De Jong and Hans Degryse
-
Leverage, Debt Maturity and Firm Investment: An Empirical Analysis