Corporate debt and Crash Risk in the brazilian stock market

This study aimed to analyze the relationship between the crash risk of Brazilian firms' stock prices and creditor monitoring through corporate debt maturity. Using a sample of non-financial companies with shares traded on the Brasil, Bolsa, Balcão (B3) stock exchange between 2010 and 2020. the data was examined through panel regressions estimated with clustered robust standard errors. Short-term debt maturity does not exhibit a statistically significant relationship with stock price crash risk. However, debt maturity diversification shows an inverse relationship with crash risk, indicating a reduction in this risk. Exploring the diversification of debt maturities may benefit both creditors and shareholders, underscoring its potential importance in corporate financial risk management strategies. Understanding crash risk while emphasizing the importance of debt maturity diversification helps safeguard creditors' interests and protect shareholder wealth. This study is the first to examine this relationship in the Brazilian context, offering valuable insights and implications for financial risk management.