The Impact of Earnings Management on the Choice of Debt Maturity Structure

• Main Authors: Shih-Cheng Chang, 張詩政
• Other Authors: Jane-Raung Lin
• Format: Others
• Language: en_US
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/86979310717709807964

碩士 === 國立交通大學 === 財務金融研究所 === 96 === Previous analysis has advanced many factors that will affect the firms’ choice of debt maturity structure. The main goal of our study is to examine the relationship between the debt maturity structure and the behavior of earnings management. Besides, we also measure the long-term stock return performance of these firms after issuing debt. From the empirical results, we find that firms which take earnings management to report higher earnings (aggressive) will have incentive to issue debt with longer maturity in order to avoid the frequent outside monitoring and higher issuing cost of short-term debt. In addition, we find that these firms with aggressive earnings management will face 5-year negative long-term stock return performance and indicate that after the manipulation is revealed, investor will lose their confidence and reflect on firms’ stock return performance.