 Is Short-Term Debt a Substitute or a Complement to Good Governance ?Deniz Anginer, Asli Demirguc-Kunt, Mete Tepe and Serif Aziz Simsir No 9022, Policy Research Working Paper Series from The World Bank Abstract: Short-term debt exposes firms to credit supply shocks and liquidity risk. Short-term debt can also reduce potential agency conflicts between managers and shareholders by exposing managers to more frequent monitoring by the market. This paper examines whether internal monitoring through independent boards and stronger shareholder protections can substitute for external monitoring through the use of short-term debt. The analysis finds that the relationship between debt maturity and governance depends on shareholder rights in a given country. In countries with stronger investor protection, governance and short-term debt act as substitutes. Instrumenting the institutional environment with legal origin confirms the results. Keywords: Inflation; Social Policy; Judicial System Reform; Legal Reform; Regulatory Regimes; Legislation; Legal Products; Civic Participation and Corporate Governance; Corporate Governance; Multinational&Corporate Governance; Capital Flows; Capital Markets and Capital Flows; International Trade and Trade Rules; Economic Growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:9022 Access Statistics for this paper More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC. |
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