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Crash risk and debt maturity: evidence from Australia

Mostafa Hasan (Department of Accounting and Corporate Governance, Macquarie Business School, Macquarie University, Sydney, Australia)
Dewan Rahman (UQ Business School, University of Queensland, Brisbane, Australia)
Grantley Taylor (School of Accounting, Curtin University, Perth, Australia)
Barry Oliver (UQ Business School, University of Queensland, Brisbane, Australia)

International Journal of Managerial Finance

ISSN: 1743-9132

Article publication date: 7 July 2020

Issue publication date: 29 April 2021

463

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.

Keywords

Acknowledgements

The authors would like to thank the Editor and anonymous reviewers for many helpful comments and suggestions. They are also grateful to Ronghong Huang, Adrian Cheung, Ahsan Habib and Robert Durand for the helpful comments.Funding: This research was supported by 2017 AFAANZ Research Grants. The usual disclaimer applies.

Citation

Hasan, M., Rahman, D., Taylor, G. and Oliver, B. (2021), "Crash risk and debt maturity: evidence from Australia", International Journal of Managerial Finance, Vol. 17 No. 3, pp. 377-400. https://doi.org/10.1108/IJMF-12-2019-0467

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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