We propose a simple idea that corporate debt maturity should serve as a good indicator of future firm performance volatility. We show in a simple two-period model that the riskiness of corporate investment is a decreasing function of corporate debt maturity. If "observable" corporate debt maturity and ex ante "unobservable" corporate risk-taking is highly correlated, corporate debt maturity should be highly correlated with "ex post" realized firm performance volatility in following years. Using data on firms in 10 developing and developed countries during 1991−2013, we find that corporate debt maturity is negatively associated with future firm operating performance volatility but is not associated with future firm value volatility.

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AcknowledgementsWe thank the Editor and two anonymous referees for constructive comments and valuable feedback. We gratefully acknowledge financial support from the Murata Science Foundation. ABSTRACTIn this paper, we use three measures that arguably capture two dimensions of "bank systemic risk", namely, (1) bank funding maturity and (2) bank asset commonality, to empirically test whether bank systemic risk has a positive effect on corporate investment. We document that in a sample of publicly listed firms in the United States over the period 1991-2013, bank systemic risk is positively associated with the firm-level investment ratio after controlling for a large set of country-level and firm-level variables. In addition, we show that a firm's leverage strengthens the positive effect of bank systemic risk on corporate investment, suggesting that more financially constrained firms experience a larger effect of bank systemic risk on corporate investment than less financially constrained firms. JEL Classification: E22; E44; G1; G21; G31

AcknowledgementsWe thank the Editor and two anonymous referees for constructive comments and valuable feedback. We gratefully acknowledge financial support from the Murata Science Foundation. ABSTRACTIn this paper, we use three measures that arguably capture two dimensions of "bank systemic risk", namely, (1) bank funding maturity and (2) bank asset commonality, to empirically test whether bank systemic risk has a positive effect on corporate investment. We document that in a sample of publicly listed firms in the United States over the period 1991-2013, bank systemic risk is positively associated with the firm-level investment ratio after controlling for a large set of country-level and firm-level variables. In addition, we show that a firm's leverage strengthens the positive effect of bank systemic risk on corporate investment, suggesting that more financially constrained firms experience a larger effect of bank systemic risk on corporate investment than less financially constrained firms. JEL Classification: E22; E44; G1; G21; G31

This paper explores why a corporate board often fails to replace a substandard CEO. I consider the situation in which the incumbent CEO and directors make decisions in the absence of the new CEO. I show that the board and the CEO maximize the expected utilities of the negotiating parties that do not include the expected utility of the potential CEO. This sometimes results in the retention of an inefficient CEO. I argue this same logic provides a theoretical explanation for how a new CEO is chosen in relation to both the voluntary and enforced replacement of an existing CEO.