How do industry tournament incentives affect firm debt maturity?

Wanxia Qi, Pornsit Jiraporn and Yixin Liu

Research in International Business and Finance, 2024, vol. 67, issue PA

Abstract: Our study investigates the effect of external industry tournament incentives on debt maturity structure. Prior research shows that industry tournament incentives motivate managers to employ more risky strategies. Recognizing this stronger tendency for risk-taking, creditors may shorten debt maturity and subject managers to more frequent scrutiny by debt markets. Consistent with this notion, our results show that stronger industry tournament incentives lead to significantly more short-term debt. This effect is more pronounced in firms with low credit quality, in areas with a high density of firms from the same industry, and in industries with more CEO positions.

Keywords: Tournament incentives; Debt maturity; Industry tournament; Debt maturity structure (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:67:y:2024:i:pa:s0275531923002076

DOI: 10.1016/j.ribaf.2023.102081

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