HCBE Faculty Articles
Title
Leverage, Debt Maturity, and Social Capital
Document Type
Article
Publication Date
2-2019
Publication Title
Journal of Corporate Finance
ISSN or ISBN
1872-6313
Volume
54
Issue/Number
2019
First Page
26
Last Page
46
Abstract/Excerpt
We find that both firm leverage and short-term debt ratios are negatively associated with social capital (i.e., the altruistic tendency and mutual trust among people within a community). This relation is more pronounced in cases where information asymmetry problems are more severe and is robust to using alternative measures of key variables, addressing endogeneity issues, employing alternative model specifications, and simultaneously estimating leverage and short-term debt. An analysis on debt structure (bank loans vs. public debt) shows consistent results. Our findings are in line with the idea that social capital lowers the need for corporate borrowing mechanisms as a means to alleviate agency problems for firms.
DOI
10.1016/j.jcorpfin.2018.11.001
NSUWorks Citation
Huang, Kershen and Shang, Chenguang, "Leverage, Debt Maturity, and Social Capital" (2019). HCBE Faculty Articles. 1032.
https://nsuworks.nova.edu/hcbe_facarticles/1032
