Title

Rollover risk and managerial cost adjustment decisions

Document Type

Article

Publication Title

Accounting and Finance

Abstract

Rollover risk is the risk that a firm may not be able to refinance its debt when it becomes due. We investigate whether managers’ resource adjustment decisions are influenced by rollover risk and find that cost stickiness is decreasing in rollover risk. Additionally, the negative relationship between rollover risk and cost stickiness is stronger for firms with higher financial constraints and fewer financing sources. These results suggest that, when faced with elevated rollover risk, managers are willing to forego the benefits from a sticky cost behaviour. Finally, the use of an alternative firm-specific measure of cost stickiness corroborates our main finding.

First Page

2843

Last Page

2878

DOI

10.1111/acfi.12417

Publication Date

9-1-2020

This document is currently not available here.

Share

COinS