Debt Maturity Structure, Shareholder Rights, and Corporate Governance

Jiraporn, Pornsit; Kitsabunnarat, Pattanaporn

doi:10.2139/ssrn.999265

Cited by 20 publications

(17 citation statements)

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“…For example, Berger et al (1997) study how selected corporate governance measures, managerial incentives and management entrenchment affect a firm's leverage choice and Benmelech (2006) studies the impact of governance and entrenchment on a firm's choice of debt maturity. Datta et al (2005) and Jiraporn and Kitsabunnarat (2008) estimate a simultaneous system of equations for leverage and maturity, but focus exclusively on the maturity choice and consider only a limited number of governance variables. For example, Datta et al (2005) only study the impact of managerial ownership on debt maturity while Jiraporn and Kitsabunnarat (2008) use the Investor Responsibility Research Center (IRRC) Governance Index, a single summary measure of twenty-four different governance provisions.…”

Section: Introductionmentioning

confidence: 99%

“…Datta et al (2005) and Jiraporn and Kitsabunnarat (2008) estimate a simultaneous system of equations for leverage and maturity, but focus exclusively on the maturity choice and consider only a limited number of governance variables. For example, Datta et al (2005) only study the impact of managerial ownership on debt maturity while Jiraporn and Kitsabunnarat (2008) use the Investor Responsibility Research Center (IRRC) Governance Index, a single summary measure of twenty-four different governance provisions. None of these papers has fully explained how individual governance mechanisms influence the capital structure using a simultaneous equation approach to jointly model leverage and maturity.…”

Section: Introductionmentioning

confidence: 99%

“…Two recent papers have used an instrumental variables approach to modeling debt maturity: Jiraporn and Kitsabunnarat (2008) and Datta et al (2005). Jiraporn and Kitsabunnarat (2008) estimate both a single equation for maturity (which excludes leverage) and a 2SLS version which includes the predicted leverage from the first stage.…”

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confidence: 99%

“…Jiraporn and Kitsabunnarat (2008) estimate both a single equation for maturity (which excludes leverage) and a 2SLS version which includes the predicted leverage from the first stage. Their primary interest is the effect of the Governance Index (obtained from IRRC) on the firm's debt maturity choice and they find a positive and significant relationship between that index and the percentage of debt maturing beyond 2 years and 5 years in both specifications.…”

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confidence: 99%

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How Entrenchment, Incentives and Governance Influence REIT Capital Structure

Ghosh

Giambona

Harding

et al. 2010

J Real Estate Finan Econ

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Although recent literature has confirmed the importance of viewing a firm's capital structure choices of leverage and debt maturity as jointly determined, to date there has been little analysis of the importance of traditional governance variables on a firm's capital structure decisions using a simultaneous equations approach. We examine the influence of managerial incentives, traditional managerial monitoring mechanisms and managerial entrenchment on the capital structure of Real Estate Investment Trusts (REITs). Using panel data, we estimate a system of simultaneous equations for leverage and maturity and find that firms with entrenched CEOs use less leverage and shorter maturity debt. This is consistent with the expectation that managers acting in their own self interest will choose lower leverage to reduce liquidity risk and use short maturity debt to preserve their ability to enhance their compensation and reputations by empire building. We also find evidence that traditional alignment mechanisms such as equity and option ownership have an offsetting effect; and that firms where the founder serves as CEO choose higher leverage and longer maturity debt. The results also provide evidence that leverage and maturity are substitutes, firms with high profitability and growth opportunities use less leverage and firms with liquid assets use more leverage and longer maturity debt.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

See 2 more Smart Citations

How Entrenchment, Incentives and Governance Influence REIT Capital Structure

Ghosh

Giambona

Harding

et al. 2010

J Real Estate Finan Econ

View full text Add to dashboard Cite

show abstract

“…Many firm managers do not desire such a close monitoring. In the study of Jiraporn & Kitsabunnarat (2007), it was concluded that managers who avoid to be the focus point of the market have a tendency in long term borrowing in such firms with a weak shareholder efficiency.…”

Section: Factors Effective On Term Structure Of Liabilitiesmentioning

confidence: 99%