How do managerial incentives affect the maturity structure of corporate public debt?

- I examine the relation between managerial ownership and debt maturity structure.
- The sample covers newly issued Japanese corporate bonds between 2005 and 2012.
- Firms with higher managerial ownership issue shorter maturity bonds.
- Firms with higher managerial ownership have higher firm-specific risk.
- Risk-taking activities are important for corporate debt maturity structure.

I examine the relation between managerial ownership and the maturity structure of corporate public debt by using a sample of newly issued Japanese corporate bonds. Firms with higher managerial ownership issue shorter maturity bonds. In addition, firms with higher managerial ownership have lower credit ratings and experience higher yield spreads. Finally, firms with higher managerial ownership exhibit higher firm performance and show a preference for risk-taking activities. Overall, my findings support the view that bondholders are concerned about wealth transfers from bondholders to shareholders through risk-taking activities and require firms with higher managerial ownership to issue shorter maturity bonds.