Debt maturity structure and stock price crash risk: The case of Turkiye

Canbaloğlu, Bilge; Sezgin, Özge; Gürgün, Gözde

doi:10.1016/j.bir.2022.07.005

Cited by 6 publications

(4 citation statements)

References 34 publications

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“…Regarding developing economies, the second measure of SPCR (DUVOL) revealed a negative but insignificant relationship, indicating that the lag in debt maturity does not impact the SPCR of firms in these economies. Such findings are consistent with Canbaloglu et al (2022), who also found a negative but statistically insignificant association between debt maturity and SPCR.…”

Section: Baseline Regression Resultssupporting

confidence: 90%

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

Haider,

Ahmad,

2024

JABES

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PurposeThis study examines the impact of debt maturity structure on stock price crash risk (SPCR) in Asian economies and the moderating effect of firm age on this relationship.Design/methodology/approachThe study utilized annual data from 432 nonfinancial firms publicly listed in six Asian countries: China, Hong Kong, Japan, Singapore, Pakistan and India. The observation period covers 14 years, from 2007 to 2020. The sample was categorized into three groups: the entire sample and one group each for developing and developed Asian economies. A generalized least squares panel regression method was employed to test the research hypotheses.FindingsThe results suggest that long-term debt has a significant negative influence on SPCR in Asian economies, indicating that firms with high long-term debt experience lower future SPCR. Moreover, firm age negatively moderates this relationship, implying that older firms may experience a more pronounced reduction in SPCR due to high long-term debt. Finally, firms in developed Asian economies with high long-term debt are more effective in mitigating the risk of a significant drop in their stock prices than firms in developing Asian economies.Originality/valueThis study contributes to the literature in several ways. To the best of the researcher’s knowledge, this is the first of such efforts to investigate the relationship between debt maturity structure and crash risk in Asia. Additionally, it reveals that long-term debt influences SPCR directly and indirectly in Asia through the moderating role of firm age. Lastly, it is likely one of the first studies by a research team in Asia to compare the nonfinancial markets of developed and developing Asian countries.

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Section: Baseline Regression Resultssupporting

confidence: 90%

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

Haider,

Ahmad,

2024

JABES

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“…(2020), who found the positive impact of raising short-term debt for long-term investment on PCR. It is confirmed by Canbaloglu et al . (2022), who reported that an increase in long-term debt could reduce the risk of a stock price crash, particularly in family-controlled firms.…”

Section: Literature Reviewsupporting

confidence: 70%

“…The same conclusion was documented by Cheng et al (2020), who found the positive impact of raising short-term debt for long-term investment on PCR. It is confirmed by Canbaloglu et al (2022), who reported that an increase in long-term debt could reduce the risk of a stock price crash, particularly in family-controlled firms. This is because active monitoring by family members can lead to lower agency conflicts in obtaining and maintaining long-term debt, which can help to protect the firm's financial stability and reduce the risk of future stock price crashes.…”

Section: Literature Reviewmentioning

confidence: 64%

Does sharia-compliant debt financing reduce stock price crash risk?

Kontesa¹

2023

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PurposeThis paper examines the impact of sharia-compliant debt financing on stock price crash risk. Unlike those previous studies that took Sukuk or sharia-compliant firms, this study tests the impact of the proportion reported sharia-compliant debt financing in the balance sheet on the risk of price crash of a firm.Design/methodology/approachUsing the data from 2,752 firm-year observations of 344 Malaysian non-financial listed companies from 2012 to 2019, this article used a robust panel data estimation technique for statistical inferences. This study also employs panel GMM and quantile least squares as the robustness check.FindingsThis study established a negative relationship between sharia-compliant debt financing and stock price crash risk. The robustness checks with different estimation techniques confirm the results. It implies that firms with a more significant proportion of Sharia-compliant financing tend to have lower future stock price crash risk.Practical implicationsConsistent with the Islamic finance literature, the present study contributes to the existing literature on Islamic capital markets from the perspective of stock price crash risk because it is vital for risk management and investment decision-making as a measure of tail risk for stocks. The findings of this research will assist investors in developing portfolio strategies that incorporate firms with higher levels of sharia-compliant debt financing in their balance sheets. Additionally, the results of this study suggest that policymakers and regulatory bodies should consider revising their monitoring approaches for publicly listed firms.Originality/valueThis study is interesting and unique, as it is a pioneer in testing the impact of sharia-compliant debt financing on reducing stock price crash risk.

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“…The modified Jones model is a modified version of the standard Jones model that accounts for changes in sales and receivables to decrease measurement errors in discretionary accruals. The modified Jones model is recommendeds the most effective method to estimate earnings management compared to other models (Canbaloglu et al, 2022). Yoon et al (2006) discovered inappropriateness in the modified Jones model for evaluating discretionary accruals in Asian companies.…”

Section: Accrual As a Proxy Of Earnings Manipulationmentioning

confidence: 99%

Accounting Manipulation and Weighted Average Cost of Capital: Detecting Earnings Management via Yoon and Miller (2006) Model: The Prospective of Pakistan

Baloch

2023

JDSS

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This research has been carried out to investigate the potential correlation between accounting manipulation and the capital expenses of corporations listed on the Pakistan Stock Exchange (PSX). The study examines 80 non-financial companies listed on the PSX from 2008 to 2019. The researchers utilized the Dynamic Panel Generalized Method of Moments (GMM) for individual effects of indicators and analysis. To measure accounting manipulation, the Yoon & Miller (2006) model, Discretionary Accrual, is used as a proxy for earnings management. The researchers also incorporated four control variables: firm size, Return on Assets, Debt to Equity, and CEO Duality. The findings suggest an inverse relationship between discretionary accruals (DAC) and the Weighted Average Cost of Capital (WACC). That is to say, when DAC increases, WACC decreases. On the other hand, a positive association exists between non-discretionary accruals and WACC, indicating that managers may use non-discretionary accruals to inflate the company's earnings. The study highlights the need for greater regulatory attention to accounting manipulation, discretionary and nondiscretionary accruals, and earnings management in non-financial listed companies in Pakistan and globally.

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Debt maturity structure and stock price crash risk: The case of Turkiye

Cited by 6 publications

References 34 publications

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

The role of debt maturity in stock price crash risk: a comparison of developing and developed Asian economies

Does sharia-compliant debt financing reduce stock price crash risk?

Accounting Manipulation and Weighted Average Cost of Capital: Detecting Earnings Management via Yoon and Miller (2006) Model: The Prospective of Pakistan

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