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Dare to play with fire? Managerial ability and the use of short-term debt

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  • Shang, Chenguang

Abstract

This study documents a positive relation between managerial ability and the use of short-term debt. This finding is robust to various specifications, including a difference-in-difference approach based on CEO turnovers. Able managers' preferences for short-term debt are amplified for firms with greater growth opportunities and are attenuated by firms' refinancing risk. Additional analyses shed light on the implications of high-ability managers' strategic use of short-term debt. Overall, the results presented in this study demonstrate that managers' innate ability plays a critical role in shaping corporate debt maturity structure.

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  • Shang, Chenguang, 2021. "Dare to play with fire? Managerial ability and the use of short-term debt," Journal of Corporate Finance, Elsevier, vol. 70(C).
  • Handle: RePEc:eee:corfin:v:70:y:2021:i:c:s0929119921001875
    DOI: 10.1016/j.jcorpfin.2021.102065
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    More about this item

    Keywords

    Capital structure; Debt maturity; Managerial ability;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G40 - Financial Economics - - Behavioral Finance - - - General

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