Debt Maturity Structure, Shareholder Rights, and Corporate Governance

39 Pages Posted: 10 Jul 2007

See all articles by Pornsit Jiraporn

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Pattanaporn Kitsabunnarat

Texas A&M International University - College of Business

Date Written: July 7, 2007

Abstract

This study investigates how debt maturity structure is influenced by the strength of shareholder rights. The empirical evidence reveals an inverse relation between the strength of shareholder rights and debt maturity. We contend that managers of firms with weak shareholder rights eschew choosing short-term debt to minimize frequent external monitoring. There is also evidence that regulation is a substitute for debt maturity in controlling agency costs. The effect of managerial entrenchment through classified boards is examined on debt maturity structure but is found to be insignificant. Finally, we demonstrate that weak shareholder rights likely bring about, and do not merely reflect, the use of longer-maturity debt.

Keywords: debt maturity, capital structure, shareholder rights, corporate governance

JEL Classification: G30, G32, G34, G38

Suggested Citation

Jiraporn, Pornsit and Kitsabunnarat, Pattanaporn, Debt Maturity Structure, Shareholder Rights, and Corporate Governance (July 7, 2007). Available at SSRN: https://ssrn.com/abstract=999265 or http://dx.doi.org/10.2139/ssrn.999265

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Pattanaporn Kitsabunnarat

Texas A&M International University - College of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

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