CEO overconfidence and corporate debt maturity

Huang, Ronghong, Tan, Kelvin Jui Keng and Faff, Robert W. (2016) CEO overconfidence and corporate debt maturity. Journal of Corporate Finance, 36 93-110. doi:10.1016/j.jcorpfin.2015.10.009

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Author Huang, Ronghong
Tan, Kelvin Jui Keng
Faff, Robert W.
Title CEO overconfidence and corporate debt maturity
Journal name Journal of Corporate Finance   Check publisher's open access policy
ISSN 0929-1199
Publication date 2016-02
Year available 2015
Sub-type Article (original research)
DOI 10.1016/j.jcorpfin.2015.10.009
Open Access Status Not Open Access
Volume 36
Start page 93
End page 110
Total pages 18
Place of publication Amsterdam, Netherlands
Publisher Elsevier
Collection year 2016
Language eng
Abstract This paper extends our knowledge of corporate debt maturity structure by examining whether and to what extent overconfident CEOs affect maturity decisions. Consistent with a demand side story, we find that firms with overconfident CEOs tend to adopt a shorter debt maturity structure by using a higher proportion of short-term debt (due within 12. months). This behavior of overconfident CEOs is not deterred by the high liquidity risk associated with such a financing strategy. Our demand side explanation remains robust even after considering six possible alternative drivers including a competing supply side explanation (in which creditors are reluctant to extend long-term debt to overconfident CEOs).
Keyword Overconfidence
Debt maturity
Liquidity risk
Cost of debt
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ
Additional Notes Available online: 6 November 2015

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2016 Collection
UQ Business School Publications
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Citation counts: TR Web of Science Citation Count  Cited 2 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 3 times in Scopus Article | Citations
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Created: Mon, 30 Nov 2015, 14:58:10 EST by Karen Morgan on behalf of UQ Business School