THE IMPACT OF DEBT MATURITY ON STOCK PRICE CRASH RISK WITH AN EMPHASIS ON INFORMATION ASYMMETRY

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TAGHIZADEH KHANQAH VAHID; TALEBNIA GHODRATALLAH

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Journal: JOURNAL OF ASSET MANAGEMENT AND FINANCING Year:2018 | Volume:6 | Issue:3 (22) Page(s): 87-104

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Title

THE IMPACT OF DEBT MATURITY ON STOCK PRICE CRASH RISK WITH AN EMPHASIS ON INFORMATION ASYMMETRY

Author(s)

TAGHIZADEH KHANQAH VAHID | TALEBNIA GHODRATALLAH | Issue Writer Certificate

Keywords

DEBT MATURITYQ1

STOCK PRICE CRASH RISKQ1

INFORMATION ASYMMETRYQ1

BAD NEWS HOARDINGQ1

Abstract

Short- term debt subjects managers to frequent monitoring, thus effectively reducing managerial discretion and enhancing information disclosure. Since lenders are more sensitive to decreases than increases in firm stock price, they have strong incentives to scrutinize borrowers and gather information about their financial conditions and future prospects. This research aims to study the economic concequences of DEBT MATURITY, to the impact of DEBT MATURITY choice on STOCK PRICE CRASH RISK of listed companies in Tehran Stock Exchange. In this regard, 120 companies were evaluated for the period 2008-2013. To test the hypothesis of the study panel data is used by software Eviews 7. We find that firms with a larger proportion of short- term debt tend to have lower future STOCK PRICE CRASH RISK, consistent with short-term debt playing an effective monitoring role over managers and constraining their BAD NEWS HOARDING behavior. Our results also show that the inverse relation between short-term debt and future crash risk is more pronounced among firms with higher degree of INFORMATION ASYMMETRY. Overall, our paper shows that short-term debt not only preserves creditors’ interests, but also protects the value of shareholders.

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APA: Copy

TAGHIZADEH KHANQAH, VAHID, & TALEBNIA, GHODRATALLAH. (2018). THE IMPACT OF DEBT MATURITY ON STOCK PRICE CRASH RISK WITH AN EMPHASIS ON INFORMATION ASYMMETRY. JOURNAL OF ASSET MANAGEMENT AND FINANCING, 6(3 (22) ), 87-104. SID. https://sid.ir/paper/245692/en

Vancouver: Copy

TAGHIZADEH KHANQAH VAHID, TALEBNIA GHODRATALLAH. THE IMPACT OF DEBT MATURITY ON STOCK PRICE CRASH RISK WITH AN EMPHASIS ON INFORMATION ASYMMETRY. JOURNAL OF ASSET MANAGEMENT AND FINANCING[Internet]. 2018;6(3 (22) ):87-104. Available from: https://sid.ir/paper/245692/en

IEEE: Copy

VAHID TAGHIZADEH KHANQAH, and GHODRATALLAH TALEBNIA, “THE IMPACT OF DEBT MATURITY ON STOCK PRICE CRASH RISK WITH AN EMPHASIS ON INFORMATION ASYMMETRY,” JOURNAL OF ASSET MANAGEMENT AND FINANCING, vol. 6, no. 3 (22) , pp. 87–104, 2018, [Online]. Available: https://sid.ir/paper/245692/en

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