Template-Type: ReDIF-Article 1.0
Author-Name: Karren Lee-Hwei Khaw 
Author-Workplace-Name: School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah, Malaysia
Author-Email: lhkhaw@uum.edu.my
Author-Name: Benjie Chien Jiang Lee
Author-Workplace-Name: School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, 06010 UUM Sintok, Kedah, Malaysia
Title: Debt Maturity, Underinvestment Problem and Corporate Value
Abstract: This study examines how Malaysian public listed firms with low and high corporate values use debt maturity as a tool to mitigate underinvestment problem. This study employs panel data methodology instead of the commonly used pooling regression. Results show that firms with low Tobin's Q ratio, a proxy for corporate value, maintain lower level of long-term debt to mitigate agency costs of debt caused by underinvestment problem, whereas firms with high Tobin's Q ratio are indifferent with the debt maturity decision. This study extends the literature on the determinants of debt maturity structure by highlighting the importance of recognising the firms by the corporate values in relation to the underinvestment problem. The findings also provide additional justification for the existing literature in explaining the negative relationship between agency costs of debt and debt maturity structure using a sample of firms from a developing market. 
Classification-JEL:
Keywords: debt maturity, agency costs of debt, underinvestment problem, Tobin's Q, corporate value
Journal: Asian Academy of Management Journal of Accounting and Finance
Pages: 1–17
Volume: 12
Issue: Suppl. 1
Year: 2016
File-URL: http://web.usm.my/journal/aamjaf/vol%2012-s-2016/aamjaf120s16_01.pdf
Handle: RePEc:usm:journl:aamjaf012s1_1-17