Debt maturity structure and stock price crash risk: The case of Turkiye

Abstract

This study explores the relationship between the debt maturity structure and the stock price crash risk for nonfinancial firms on the Borsa Istanbul from 2009 to 2019. Family ownership is added to the analyses to provide a new perspective on the literature examining the link between stock price crash risk and debt structure. The results show that an increase in long-term debt reduces the risk of a stock price crash, as efficient corporate management practices not only result in favorable debt issuance at a longer term but also reduces information asymmetry that leads to crash risk at firms. Furthermore, the mitigating effect of long-term debt on crash risk is more pronounced at family-controlled firms because active monitoring by family members causes lower agency conflicts in obtaining longer-term debt as well as in maintaining family status, which in turn also diminishes future stock price crashes.