The Effect of Debt Maturity on Future Stock Price Crash Risk by considering Corporate Governance

Document Type : Original Article

Authors

1 Master in Accounting, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

2 Assistant Professor, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran

10.22034/iaar.2020.128195

Abstract

One of the factors lead to stock price crash is managers’ activities to conceal bad news and negative performance inside of the company. One of the cases that can prevent opportunistic behavior of managers is maturity of debt. Debtmaturity will cause that creditors in order to renew the contract called for more information about the firm's position and this situation prevents the accumulation of  bad newsby managers and ultimately prevented a sharp fall in stock prices. The purpose of this study is to determine the effect of  Debt Maturity on the future stock price crash risk by Considering Corporate Governance.. Time domain of  this research is from 2010 to 2014, but the information and data needed for the period from 2007 to 2015 have been collected. In order to test the hypothesis, multivariate linear regression model and panel data have been used. The results of this study showed a significant inverse relationship between the debt maturity and future Stock Price Crash Risk. In other words, with shorter debt maturity the stock price crash risk is also can reduced but the strong Corporate Governance can castrate it.

Keywords

Accounting and Auditing Research
Volume 12, Issue 48
January 2021
Pages 95-106

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