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Debt maturity choice in CEOs’ incentive to signal abilities

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  • Chih-Wei Wang

Abstract

This research examines the effect of CEOs’ ability concerning their debt maturity choice. Examining public firms over the period 1997–2016 in Taiwan, we find that high-ability managers choose short-term debt financing to signal their ability. We adopt the rollover risk channel to prove that managers signal their ability on the use of short-term debt are only from their intention. In addition, we consider the separation of ownership and control as well as information opacity, which could force managers to have a greater incentive to use short-term debt for signaling their ability to align the managers-shareholders conflict and maintain their reputation, compensation, and bonus from being affected by information opacity.

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  • Chih-Wei Wang, 2022. "Debt maturity choice in CEOs’ incentive to signal abilities," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 29(3), pages 632-648, May.
    • Handle: RePEc:taf:raaexx:v:29:y:2022:i:3:p:632-648
    DOI: 10.1080/16081625.2020.1754258
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    Cited by:

    1. Lee, Chien-Chiang & Wang, Chih-Wei & Wu, Yu-Ching, 2023. "CEO inside debt and downside risk: Evidence from internal and external environments," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    2. Lin, Chaonan & Ko, Kuan-Cheng & Yang, Nien-Tzu, 2023. "Is there the maturity premium in Taiwan?," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).

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