Journal of Corporate Finance Vol. 36 2016
CEO overconfidence and corporate debt maturity
Abstract
This paper extends our knowledge of corporate debt maturity structure by examining whether and to what extent overconfident CEOs affect maturity decisions. Consistent with a demand side story, we find that firms with overconfident CEOs tend to adopt a shorter debt maturity structure by using a higher proportion of short-term debt (due within 12months). This behavior of overconfident CEOs is not deterred by the high liquidity risk associated with such a financing strategy. Our demand side explanation remains robust even after considering six possible alternative drivers including a competing supply side explanation (in which creditors are reluctant to extend long-term debt to overconfident CEOs).
- DOI
- 10.1016/j.jcorpfin.2015.10.009
- Volume
- 36
- Pages
- 93-110
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref