The Relationship between Debt Maturity Structure and Earnings Management

• Main Authors: Wei-Ju Liao, 廖尉如
• Other Authors: Her-Jiun Sheu
• Format: Others
• Language: en_US
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/76110359101875321072

碩士 === 國立交通大學 === 財務金融研究所 === 95 === Researchers of debt financing policies have already shown the importance of debt maturity by means of different hypotheses. Recent research emphasizes that the discrepancy of interests between managers and shareholders also influences debt maturity choice. The aim of this article attempts to explore how the corporate debt maturity structure changes in terms of the manager’s behavior of earnings management. Using initial public offerings (IPOs) firms as the sample and modeling debt maturity and leverage determined endogenously and simultaneously, we conclude that manager’s behavior of earnings management causes subsequent larger portion of long-maturity debt issued in the following year after IPOs. Managers of aggressive firms in the period of IPOs have the incentive to lengthen the maturity of corporate debt hereafter in order to prevent frequent monitoring by the market and higher issuing cost for rolling over short-maturity debt.