Dare to play with fire? Managerial ability and the use of short-term debt

Chenguang Shang

Journal of Corporate Finance, 2021, vol. 70, issue C

Abstract: This study documents a positive relation between managerial ability and the use of short-term debt. This finding is robust to various specifications, including a difference-in-difference approach based on CEO turnovers. Able managers' preferences for short-term debt are amplified for firms with greater growth opportunities and are attenuated by firms' refinancing risk. Additional analyses shed light on the implications of high-ability managers' strategic use of short-term debt. Overall, the results presented in this study demonstrate that managers' innate ability plays a critical role in shaping corporate debt maturity structure.

Keywords: Capital structure; Debt maturity; Managerial ability (search for similar items in EconPapers)
JEL-codes: G32 G40 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:70:y:2021:i:c:s0929119921001875

DOI: 10.1016/j.jcorpfin.2021.102065

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