Crash risk and debt maturity: evidence from Australia

Mostafa Hasan; Dewan  Rahman; Grantley Taylor; Barry  Oliver

doi:10.1108/IJMF-12-2019-0467

Crash risk and debt maturity: evidence from Australia

Mostafa Hasan, Dewan Rahman, Grantley Taylor, Barry Oliver

Department of Accounting and Corporate Governance

Research output: Contribution to journal › Article › peer-review

13 Citations (Scopus)

128 Downloads (Pure)

Abstract

Purpose: The purpose of this paper is to examine the association between debt maturity structure and stock price crash risk in Australia.

Design/methodology/approach: The authors employ panel data estimation with industry and year fixed effects. The paper uses a sample of 1,548 publicly listed Australian firms (8,661 firm-year observations) covering the 2000–2015 period.

Findings: Stock price crash risk is positively and significantly associated with the long-term debt maturity structure of firms. In addition, this positive association is more pronounced for firms with a more opaque information environment.

Originality/value: This is the first study to examine stock price crash risk in Australia. The findings are value relevant as it uncovers how debt maturity structure affects shareholders' wealth protection.

Original language	English
Pages (from-to)	377-400
Number of pages	24
Journal	International Journal of Managerial Finance
Volume	17
Issue number	3
Early online date	6 Jul 2020
DOIs	https://doi.org/10.1108/IJMF-12-2019-0467
Publication status	Published - 29 Apr 2021

Keywords

Accounting conservatism
Debt maturity
Earnings management
Idiosyncratic volatility
Stock price crash risk

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10.1108/IJMF-12-2019-0467

Accepted author manuscriptAccepted author manuscript, 680 KBLicence: Other

Cite this

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AB - Purpose: The purpose of this paper is to examine the association between debt maturity structure and stock price crash risk in Australia. Design/methodology/approach: The authors employ panel data estimation with industry and year fixed effects. The paper uses a sample of 1,548 publicly listed Australian firms (8,661 firm-year observations) covering the 2000–2015 period. Findings: Stock price crash risk is positively and significantly associated with the long-term debt maturity structure of firms. In addition, this positive association is more pronounced for firms with a more opaque information environment. Originality/value: This is the first study to examine stock price crash risk in Australia. The findings are value relevant as it uncovers how debt maturity structure affects shareholders' wealth protection.

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KW - Idiosyncratic volatility

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Crash risk and debt maturity: evidence from Australia

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