Leverage, Debt Maturity, and Social Capital

Event Location / Date(s)

Southwest Finance Association 2018 MeetingAlburquerque, NM

Event Name / Location

Southwest Finance Association 2018 Meeting

Presentation Date

2018

Document Type

Conference Presentation

Presenter(s) / Author(s)

Kershen Huang, Nova Southeastern UniversityFollow
Chenguang Shang, Bentley University

ORCID ID

Kershen Huang0000-0002-7141-3668

Description

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. Using alternative measures of key variables, addressing endogeneity issues, employing alternative model specifications, and simultaneously estimating leverage and short-term debt do not change our results qualitatively. Our results are consistent with the idea that social capital lowers the need for corporate borrowing mechanisms as a means to alleviate agency problems for firms, allowing reallocation of resources.

First Page

1

Last Page

49

Comments

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NSUWorks Citation

Huang, Kershen and Shang, Chenguang, "Leverage, Debt Maturity, and Social Capital" (2018). HCBE Faculty Presentations. 1372.
https://nsuworks.nova.edu/hcbe_facpres/1372