 Corporate Debt Maturity and Future Firm Performance VolatilityMeg Adachi-Sato and Chaiporn Vithessonthi () No 29, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research Abstract: We propose a simple idea that corporate debt maturity should serve as a good indicator of future firm performance volatility. We show in a simple two-period model that the riskiness of corporate investment is a decreasing function of corporate debt maturity. If “observable†corporate debt maturity and ex ante “unobservable†corporate risk-taking is highly correlated, corporate debt maturity should be highly correlated with “ex post†realized firm performance volatility in following years. Using data on publicly listed firms in 10 developing and developed countries over the period 1991–2013, we find that future firm operating performance volatility decreases as corporate debt maturity increases and that future firm value volatility is not associated with corporate debt maturity. In addition, banking sector development and export intensity of a country play an important role in determining firm operating performance volatility. Keywords: Debt maturity; Developing Countries; Developed Countries; Firm Performance Volatility; Investment (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:pui:dpaper:29 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research Contact information at EDIRC. |
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