Title: How debt maturity reacts to the interactions of internal corporate governance mechanisms

Authors: Hanan Alhussayen; Ridha Shabou; Imed Medhioub

Addresses: College of Business Administration, King Saud University, Riyadh, Saudi Arabia ' Faculté des Sciences Économiques et de Gestion de Sfax, University of Sfax, Tunisia ' Department of Finance and Investment, Al-Imam Mohammad Ibn Saud Islamic University, Riyadh, Saudi Arabia

Abstract: As the two primary internal corporate governance mechanisms, boards of directors and ownership structures are important for disciplining managers through short-term and long-term debt and, thus, debt maturity. The interactions between these mechanisms tend to define which type of debt is the more effective discipline mechanism. Thus, this study aims to define the impacts of interactions between intensive board monitoring and ownership structures on debt maturity for all non-financial firms listed on the Saudi market from 2008 to 2013. The results reveal that board monitoring intensity encourages Saudi listed firms to apply more long-term debt. Both direct ownership by large shareholders and family-held firms as controlling shareholders strengthen the monitoring functions of the board and encourage Saudi listed firms to apply more long-term debt. In contrast, ultimate owners, who hold indirect ownership of firms, tend to distract the board from applying its monitoring functions effectively.

Keywords: intensive board monitoring; IBM; direct ownership; indirect ownership; family ownership; debt maturity; long-term debt; short-term debt.

DOI: 10.1504/AAJFA.2021.119476

Afro-Asian Journal of Finance and Accounting, 2021 Vol.11 No.5, pp.691 - 717

Received: 23 May 2018
Accepted: 10 Dec 2018

Published online: 07 Dec 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article