New insights on the importance of agency costs for corporate debt maturity decisions

This study provides new insights on the relationship between corporate debt maturity and agency costs by investigating empirically the impact of managerial ownership and the divergence between control and cash-flow rights on debt maturity. A significant negative effect of managerial ownership on debt maturity is observed. Moreover, the results reveal that the wedge between control and cash-flow rights also exerts a negative influence. The analysis further suggests that the negative effect of managerial ownership decreases in widely-held firms and increases with the discrepancy between control and cash-flow rights.