Voluntary disclosure, ownership structure, and corporate debt maturity: A study of French listed firms

This study examines the effect of voluntary disclosure on corporate debt maturity and explores the role that ownership structure plays in this effect. Using a sample of 440 French listed firms over the period 2007-2013, the empirical results indicate that firms with higher voluntary disclosure have more long-term debt, suggesting that companies benefit from extensive disclosure by having greater access to long maturity debt. This is consistent with the evidence that voluntary disclosure provides an efficient monitoring mechanism in firms where long-term debt may insulate firms from lenders’ scrutiny for a long time. Results also show that the positive association between voluntary disclosure and long-term debt is relevant only when control rights of the controlling shareholders are significantly in excess of cash flow rights. This supports the findings of recent work that better disclosure policies are viewed more positively by the market in environments where the risk of wealth expropriation by dominant shareholders is higher.