Does Internal Board Monitoring Affect Debt Maturity

Finance

Speaker:Onur Tosun, University of Warwick
Website: https://www.wbs.ac.uk/about/person/onur-tosun
Date: Tuesday 20 March 2018
Time: 1.45 pm
Location: Pearson teaching room, Building: one

Further details

ABSTRACT

Using the Sarbanes-Oxley (SOX) Act as an exogenous shock to board structure, we identify internal monitoring via board independence, and estimate its impact oncorporate debt maturity. The findings provide support for agency theory. As boardindependence increases, internal monitoring becomes stronger, and good governancesubstitutes for external control over managers through short-term debt. Subsequently, firms have more long-maturity debt. The results are robust to controlling for cash, bond ratings, blockholders, CEO duality, yield, debt seniority and covenants; and more significant for conglomerates and firms with straight debt, high intangibility, and discretionary accruals. The relation becomes weaker during financial crises.

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