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Debt maturity structure and the quality of risk disclosures

Author

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  • Wang, Sumingyue
  • Wang, Xinlu
  • Xu, Liang

Abstract

This paper investigates whether a firm's debt maturity structure affects the quality of its risk disclosures. Using a sample of U.S. public firms from 2005 to 2017, we provide robust evidence that a firm's exposure to refinancing risk, measured as the proportion of long-term debt that matures within one year, is positively correlated with the readability and specificity of risk disclosures. This relationship is stronger for firms that have greater concerns over refinancing risk and for firms operating in environments with lower proprietary disclosure costs. In addition, we show that high-quality risk disclosures can help firms mitigate refinancing risk by reducing the cost of future debt financing. Our study extends the current literature on risk disclosures and enhances the understanding of how refinancing risk shapes corporate disclosures.

Suggested Citation

  • Wang, Sumingyue & Wang, Xinlu & Xu, Liang, 2023. "Debt maturity structure and the quality of risk disclosures," Journal of Corporate Finance, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:corfin:v:83:y:2023:i:c:s0929119923001529
    DOI: 10.1016/j.jcorpfin.2023.102503
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    References listed on IDEAS

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    More about this item

    Keywords

    Debt maturity structure; Refinancing risk; Risk disclosures; Cost of debt financing;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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