Distracted institutional shareholders and debt maturity-Reference-Cited by-同舟云学术

Distracted institutional shareholders and debt maturity

Published:2024-06-14 Issue: Volume: Page:
ISSN:0270-2592
Container-title:Journal of Financial Research
language:en
Short-container-title:J of Financial Research

Author:

Cheung Adrian (Wai Kong)¹^ORCID,Khoo Joye²^ORCID,Wang Rui³^ORCID

Affiliation:

1. Faculty of Finance City University of Macau Macao

2. School of Accounting, Economics and Finance Curtin University Australia

3. Department of Accountancy Lingnan University Hong Kong

Abstract

AbstractWe examine whether institutional shareholders’ distraction affects corporate debt maturity decisions. We find that firms with distracted shareholders are associated with lengthened debt maturity. The effect becomes stronger for firms with high information asymmetry or those with high levels of financial constraint. When distraction is high and debt maturity is low, firms hold more cash and use that cash in value‐destroying acquisitions. This supports the prevalence of agency problems when institutional shareholders are distracted. The impact of distraction is persistent and affects the debt maturity decision in the future. Our findings are robust to endogeneity and other concerns.

Publisher

Wiley

Link

https://onlinelibrary.wiley.com/doi/pdf/10.1111/jfir.12419

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