Debt maturity structure and the quality of risk disclosures

Sumingyue Wang, Xinlu Wang and Liang Xu

Journal of Corporate Finance, 2023, vol. 83, issue C

Abstract: This paper investigates whether a firm's debt maturity structure affects the quality of its risk disclosures. Using a sample of U.S. public firms from 2005 to 2017, we provide robust evidence that a firm's exposure to refinancing risk, measured as the proportion of long-term debt that matures within one year, is positively correlated with the readability and specificity of risk disclosures. This relationship is stronger for firms that have greater concerns over refinancing risk and for firms operating in environments with lower proprietary disclosure costs. In addition, we show that high-quality risk disclosures can help firms mitigate refinancing risk by reducing the cost of future debt financing. Our study extends the current literature on risk disclosures and enhances the understanding of how refinancing risk shapes corporate disclosures.

Keywords: Debt maturity structure; Refinancing risk; Risk disclosures; Cost of debt financing (search for similar items in EconPapers)
JEL-codes: G14 G21 G30 M41 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:83:y:2023:i:c:s0929119923001529

DOI: 10.1016/j.jcorpfin.2023.102503

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