Contact Us

For Marketing, Sales and Subscriptions Inquiries
Rockefeller Center, 45 Rockefeller Plaza
20th Flr Unit #5, New York, NY 10111
United States

Conference List

Financial Risk and Management Reviews

June 2016, Volume 2, 1, pp 1-25

Does Managerial Emotional Biases Affect Debt Maturity Preference? Bayesian Network Method: Evidence from Tunisia

AZOUZI Mohamed Ali



AZOUZI Mohamed Ali 1


  1. Assistant Professor in Finance and Accounting Methods Higher Institute of Business Administration (ISAAS) University of Sfax, Tunisia 1

  2. Doctor and HDR financial and accounting Associate Professor of Universities Higher Institute of Business Administration (ISAAS) University of Sfax, Tunisia 2

Pages: 1-25

DOI: 10.18488/journal.89/2016.2.1/

Share :


This study documents that managerial characteristics’ play an important role in determining corporate debt maturity. Specifically, we focus on the relationship between the managerial biases and firm debt maturity preference. Empirical analysis of the relationship between emotional bias and debt maturity using Bayesian Network Method. We distributed a questionnaire among 100 Tunisian managers to measure their emotional biases. Our results have revealed that the behavioral analysis of debt maturity preference implies leader affected by behavioral biases (optimism, loss aversion, and overconfidence) presence prefer long term debt maturity allowing this protect against the takeover operation Russianness.

Contribution/ Originality
The paper pushing organizations managers to choose according to their emotional level (applied emotional capacity test up psychometric testing). In addition, it increases the validity of inferences from the research. This paper incites governments to establish training programs aimed at the development of learning of emotional capacity.


Emotional biases, Debt maturity, Behavioral corporate finance, Bayesian network, Managerial characteristics.



  1. Adams, K.H., E. Hansen, L.H. Pinborg, S.G. Hasselbalch, C. Svarer, S. Holm, T.G. Bolvig and G.M. Knudsen, 2005. Patients with obsessive-compulsive disorder have increased 5-HT2A receptor binding in the caudate nuclei. International Journal of Neuropsychopharmacology, 8(3): 391-401.
  2. Agrawal, A. and N. Jayaraman, 1994. The dividend policies of all- equity firms, a direct test of the free cash flow theory. Managerial and Decision Economics, 15(2): 139-148.
  3. Antoniou, A., Y. Guney and K. Paudyal, 2007. The determinants of capital structure: Capital market oriented versus bank oriented institutions. Journal of Financial and Quantitative Analysis, 43(1): 59-92.
  4. Azouzi, M.A. and A. Jarboui, 2012. CEO emotional bias and capital structure choice, bayesian network method. Business Excellence and Management, 2(2): 47-70.
  5. Baker, M., S.R. Richard and J. Wurgler, 2007. Behavioral corporate finance. Handbook of Corporate Finance, 1: 145-186.
  6. Baker, M., R.S. Ruback and J. Wurgler, 2004. Behavioral corporate finance: A survey. SSRN, à paraître (2005). In B. Eckbo (Eds). Handbook of Corporate Finance: Empirical Corporate Finance.
  7. Barclay, M. and C.W. Smith, 1995. The maturity structure of corporate debt. Journal of Finance, 50(2): 609-631.
  8. Ben-David, I., J. Graham and C. Harvey, 2007. Managerial overconfidence and corporate policies, AFA 2007. Chicago Meetings Paper.
  9. Ben-David, S., J. Blitzer, K. Crammer, A. Kulesza, F. Pereira and J. Vaughan, 2010. A theory of learning from different domains. Machine Learning Journal, 79(1, 2): 151-175.
  10. Bernardo, A. and I. Welch, 2001. On the evolution of overconfidence and entrepreneurs. Journal of Economics & Management Strategy, 10(3): 301-330.
  11. Bertrand, M. and S. Mullainathan, 2003. Enjoying the quiet life? Corporate governance and managerial preferences. Journal of Political Economy, 111(5): 1043-1075.
  12. Bertrand, M. and A. Schoar, 2003. Managing with style: The effect of managers on corporate policy, joint with Marianne Bertrand. Quarterly Journal of Economics, 118(4): 1169-1208.
  13. Booth, L., V. Aivazian, A. Demirguc-Kunt and V. Maksimovic, 2001. Capital structure in developing countries. Journal of Finance, 56(1): 87-130.
  14. Bujadi, M.L. and A.J. Richardson, 1997. A citation trail review of the uses of firme size in accounting research. Journal of Accounting Literature, 16: 1-27.
  15. Bushman, R., J. Piotroski and A. Smith, 2004. What determines corporate transparency? Journal of Accounting Research, 42(2): 207–252.
  16. Cazavan-Jeny, A., 2004. Le ratio market-to-book et la reconnaissance des immatériels- une étude du marché français. Comptabilité Contrôle Audit, 10(2): 99-124.
  17. Chang, C., A.C. Lee and C.F. Lee, 2009. Determinants of capital structure choice: A structural equation modelling approach. Quarterly Review of Economics and Finance, 49(2): 197-213.
  18. Chtourou, S., J. Bédard and L. Couteau, 2001. Corporate governance and earning management. Working Paper, Laval University.
  19. Chung, K. and S.A. Pruitt, 1994. A simple approximation of Tobin’s q. Financial Management, 23(3): 70-74.
  20. Cliche, A., 2000. Les déterminants de la gestion des risques par les entreprises non financières: Une revue de la littérature. Cahier De Recherche: 1206-3290.
  21. Cockburn, I. and Z. Griliches, 1988. Industry effects and appropriability measures in the stock market. American Economic Review, 78(2): 419-424.
  22. Draief, S., 2010. Structure financière, gestion des résultats et caractéristiques de la firme. Comptabilité, Contrôle, Audit et Institutions, halshs-00578113.
  23. Dufour, D. and E. Molay, 2010. La structure financière des PME françaises: Une analyse sectorielle sur données de panel, manuscrit auteur, publié dans crises et nouvelles problématique de la valeur, Nice, hal-00479529.
  24. Fama, E.F. and K.R. French, 2002. Testing tradeoff and pecking order predictions about dividends and debt. Review of Financial Studies, 15(1): 1-33.
  25. Fama, E.F. and M.C. Jensen, 1983. Separation of ownership and control. Journal of Law and Economics, 26(2): 301-325.
  26. Forker, J.J., 1992. Corporate governance and disclosure quality. Accounting and Business Research, 22(86): 111-124.
  27. Frank, M. and V. Goyal, 2007. Trade-off and pecking order theories of debt. Working Paper, Tuck School of Business at Dartmouth.
  28. Gervais, S., J.B. Heaton and T. Odean, 2002. The positive role of overconfidence and optimism in investment policy. Mimeo: University of California, Berkeley.
  29. Goel, A.M. and A.V. Thakor, 2008. Overconfidence, CEO selection, and corporate governance. Journal of Finance, 63(6): 2737–2784.
  30. Graham, J.R., 2000. How big are the tax benefits of debt. Journal of Finance, 55(5): 1901-1940.
  31. Graham, J.R., C.R. Harvey and M. Puri, 2013. Managerial attitudes and corporate actions. Journal of Financial Economics, 109(1): 103-121.
  32. Griliches, Z., 1981. Market value, R&D and patents. Economic Letters, 7(2): 183-187.
  33. Gueney, Y. and K. Paudyal, 2003. The determinants of corporate debt maturity structure. EFA Annual Conference Paper Helsinki Meetings.
  34. Gul, F.A. and J.S.L. Tsui, 1998. A test of the free cash flow and debt monitoring hypotheses: Evidence from audit pricing. Journal of Accounting and Economics, 24: 219-237.
  35. Hackbarth, D., 2009. Determinants of corporate borrowing: A behavioral perspective. Journal of Corporate Finance, 15(4): 389–411.
  36. Haniffa, R. and T. Cooke, 2000. Culture, corporate governance and disclosure in Malaysian corporations. Asian AAA World Conference, Singapore, 28-30 June.
  37. Harris, M. and A. Raviv, 1991. The theory of capital structure. Journal of Finance, 46(1): 297-355.
  38. Hawkins, S.A., S.J. Hoch and J. Meyers-Levy, 2001. Low-involvement learning: Repetition and coherence in familiarity and belief. Journal of Consumer Psychology, 11(1): 1-11.
  39. Heaton, J., 2002. Managerial optimism and corporate finance. Financial Management, 31(2): 33-45.
  40. Helliar, C., D. Power and C. Sinclair, 2005. Managerial irrationality in financial decision making. Managerial Finance, 31(4): 1-11.
  41. Hirshleifer, D., 1993. Managerial reputation and corporate investment decisions. Financial Management, 22(2): 145-160.
  42. Ho, C.R. and Y. Chang, 2009. Ceo overconfidence and corporate financial distress. Available from [Accessed August 15, 2009].
  43. Hovakimian, A., G. Hovakimian and H. Tehranian, 2004. Determinants of target capital structure: The case of dual debt and equity issues. Journal of Financial Economics, 71(3): 517-540.
  44. Huang, R. and J.R. Ritter, 2009. Testing theories of capital structure and estimating the speed of adjustment. Journal of Financial and Quantitative Analysis, 44(02): 237-271.
  45. Jaggi, B. and F.A. Gul, 1999. An analysis of joint effects of investment opportunity set, free cash flows and size on corporate debt policy. Review of Quantitative Finance and Accounting, 12(4): 371-381.
  46. Jalilvand, A. and R.S. Harris, 1984. Corporate behaviour in adjusting to capital structure and dividend targets: An econometric study. Journal of Finance, 39(1): 127-145.
  47. Jensen, M.C., 1986. Agency costs of free cash-flow, corporate finance and takeovers. American Economic Review, 76(2): 323–339.
  48. Julien and Marchesnay, 1987. La petite entreprise. Paris: Vuibert.
  49. Kahneman, D., S. Knetsch and R.H. Thaler, 1991. The endowment effect, loss aversion, and status quo bias. Journal of Economic Perspectives, 5(1): 193-206.
  50. Kaplan, S.N., M.M. Klebanov and M. Sorensen, 2010. Which CEO characteristics and abilities matter? Journal of Finance, 62(6): 2725-2762.
  51. Landier, A. and D. Thesmar, 2009. Financial risk management: When does independence fail? American Economic Review, American Economic Association, 99(2): 454-458.
  52. Lang, L., R.M. Stulz and R.A. Walkling, 1991. A test of free cash-flow hypothesis the cash of bidder return. Journal of Financial Economics, 29(2): 315-335.
  53. Lehn, K. and A.B. Poulsen, 1989. Free cash flow and stockholder gains in going private transactions. Journal of Finance, 44(3): 771-787.
  54. Lin, Y.H., S.Y. Hu and M.S. Chen, 2007. Testing peking order prediction from the viewpoint of managerial optimism: Some empirical evidence from Taiwan. Pacific-Basin Finance Journal, 16: 160-181.
  55. Lindenberg, E. and S. Ross, 1981. Tobin's q ratio and industrial organization. Journal of Business, 54(1): 1-32.
  56. Malmendier, U. and G. Tate, 2005. CEO overconfidence and corporate investment. Journal of Finance, 60(6): 2661-2700.
  57. Malmendier, U. and G. Tate, 2008. Who makes acquisitions? CEO overconfidence and the market's reaction. Journal of Financial Economics, 89(1): 20-43.
  58. Malmendier, U., G. Tate and J. Yan, 2010. Managerial beliefs and corporate financial policies. Working Paper n°105, UC Berkeley and UC Los Angeles,
  59. Megna, P. and L. Klock, 1993. The impact of intangible capital on Tobin’s Q in the semiconductor industry. American Economic Review, 83(2): 265-269.
  60. Menkhoff, L. and M. Nikiforow, 2009. Professionals endorsement of behavioral finance: Does it impact their perception of markets and themselves? Journal of Economic Behavior & Organization, 71(2): 318-329.
  61. Moussu, C. and C. Thibierge, 1997. Politique financière, opportunité d’investissement et actifs immatériels en Europe: Théorie et étude empirique. Banque et Marchés n°30, Septembre- Octobre, 6-2.
  62. Myers, S. and N. Majluf, 1984. Corporate financing and investment decisions when firms have information those investors do not have. Journal of Financial Economics, 13(2): 187-221.
  63. Myers, S.C., 1984. The capital structure puzzle. Journal of Finance, 39(3): 574-592.
  64. Nosic, A. and M. Weber, 2008. How riskily do i invest? The role of risk attitudes, risk perceptions, and overconfidence. Decision Analysis, 7(3): 282-301.
  65. Pearl, J., 1986. Fusion, propagation, and structuring in belief networks. Journal of Artificiel Intelligence, 29(3): 241-288.
  66. Rajan, R.G. and L. Zingales, 1995. What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5): 1421-1460.
  67. Ross, S., 1977. The determination of financial structure: The incentive signaling approach. Bell Journal of Economics, 8(1): 23-40.
  68. Rozeff, M.S., 1982. Growth, beta and agency costs as determinants of dividend payout ratio. Journal of Financial Research, 5(3): 249-259.
  69. Scherr, F. and H.M. Hulbert, 2001. The debt maturity structure of small firms. Financial Management, 30(1): 85–111.
  70. Skinner, D., 1993. The investment opportunity set and accounting procedure choice: Preliminary evidence. Journal of Accounting and Economics, 16(4): 407– 445.
  71. Stulz, R., 1990. Managerial discretion and optimal financing policy. Journal of Financial Economics, 26(1): 3-27.
  72. Stulz, R.M., 1996. Rethinking risk management. Journal of Applied Corporate Finance, 9(3): 8-24.
  73. Thibierge, C., 2001. Actifs immatériels, valorisation boursière et contrainte d'endettement: Etude empirique sur les marchés français et espagnol. Congrès International de l'Association Française de Finance, Namur. pp: 28-30.
  74. Titman, S. and R. Wessels, 1998. The determinants of capital structure choice. Journal of Finance, 43(1): 1-19.
  75. Wright, D.W., 1996. Evidence on the relation between corporate governance characteristics and the quality of financial reporting. No. 9601. University of Michigan.
  76. Zhang, G., 1997. Ownership concentration, risk aversion and the effect of financial structure on investment decisions. European Economic Review, 42(9): 1751-1777.


Google Scholor ideas Microsoft Academic Search bing Google Scholor


Competing Interests:


Related Article

( 1 ) Managerial Judgement Versus Financial Techniques in Strategic Investment Decisions: An Empirical Study on the Syrian Coastal Region Firms
( 2 ) Does Managerial Emotional Biases Affect Debt Maturity Preference? Bayesian Network Method: Evidence from Tunisia
( 4 ) Emotional Workgroup Performance and Group Effectiveness Egyptian Context
( 6 ) A Study of Transnational and Transformation Leadership Styles and Factors Affect The Leadership Style
( 8 ) A Factor Analysis Approach Towards a Study of the Factors Affecting Students’ Choice of Higher Education Institution: A Case Study of a Private Institution (Twintech International University College of Technology)
( 9 ) Analyzing Factors Affecting the Success of Social Media Posts for B2b Networks: A Fractional-Factorial Design Approach
( 10 ) Analysis of Environmental Factors Affecting Manufacturing Small and Medium-Size Enterprises in Kogi State Nigeria
( 11 ) Does External Borrowing Affect Economic Growth? A Revisit of the Age-Long Debate for Nigeria
( 12 ) Factors Affecting the Individual Stock Price Index (IHSI) Industrial Manufacturing Sector in Indonesia, Automotive Sub Sectors, and Components in Indonesia Stock Exchange (IDX)
( 13 ) Does Capital Structure Affect the Profitability of Listed Family and Non-Family Firms? Evidence from Bangladesh
( 14 ) Factors Affecting the Capital Structure of the Textile Industry in Bangladesh: An Inferential Study
( 15 ) Factors Affecting Profitability of General Insurance Companies in Indonesia
( 16 ) Analysis of Factors Affecting Capital Structure and the Impact on LQ-45 Share Price in 2015-2018
( 17 ) Role of Foreign Investment and External Debt in Determination of Exchange Rate
( 18 ) The Impact of the Global Financial Crisis on the Debt, Liquidity, Growth, and Volume of Companies in Palestine Stock Exchange
( 20 ) The Effect of Public Debt on Domestic Product and Unemployment (An Empirical Study on the Palestinian Economy)
( 21 ) Examining Long Run Relationship between Household Debt and Household Savings in South Africa – An Error Correction Model and Granger Causality
( 22 ) External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries
( 23 ) External Debt and Nigeria's Sovereignty
( 24 ) Fiscal Reaction Functions and Public Debt Sustainability in Nigeria: An Error Correction Mechanism Approach
( 25 ) External Debt Dynamics and Sustainable Growth in Nigeria
( 29 ) On the Prediction of the Inflation Crises of South Africa Using Markov-Switching Bayesian Vector Autoregressive and Logistic Regression Models
( 30 ) Assessment of Mental Health of Undergraduate Students Based on Age: A Bayesian Ordinal Quantile Regression Approach
( 31 ) Stock Market Index Prediction with Neural Network during Financial Crises: A Review on Bist-100
( 34 ) Entrepreneurial Networking and Women Entrepreneurs’ Contribution to Employment Creation in Rivers State, Nigeria
( 35 ) Impact of Network Finance Development on Inflation: Evidence from Chinese Market
( 37 ) New Evidence on the Link Between Income Inequality and Misery Index: A Nonlinear Time Series Analysis
( 38 ) How Telecommunication Development Aids Economic Growth: Evidence from Itu Ict Development Index (IDI) Top Five Countries for African Region
( 39 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 40 ) The Nexus between Financial Crisis and Household Consumption: Evidence from Emerging Countries
( 41 ) Effective Tax Administration and Institutionalization of Accounting Systems in Small and Medium Scale Enterprises: Evidence from Nigeria
( 42 ) Moderating Effect of Demographics on Monetary Motivation and Employees Job Performance Relationship: Evidence from Malaysia
( 43 ) The Impact of Dividend Policy on Shareholders’ Wealth before and After Financial Melt down: Evidence from FMCG Sector in India
( 44 ) Stock Market Performance and Economic Growth: Evidence from Nigeria Employing Vector Error Correction Model Framework
( 45 ) Share Options, Share Award and Firm’s Performance: Evidence from Malaysian Public Listed Companies
( 46 ) Impact of Inflation on Per Capita Income in Emerging Economies: Evidence from BRICS Nations
( 48 ) Empirical Evidence on Municipal Tax Policy and Firm Growth
( 49 ) The Effect of Exchange Rate Changes on Consumer Prices in Nigeria: Evidence from VECM Model
( 50 ) Testing the PPP Using Unit Root Tests with Structural Breaks: Evidence from Politically Unstable Arab Countries
( 51 ) Dynamics of Inflation, Economic Growth, Money Supply and Exchange Rate in India: Evidence from Multivariate Analysis
( 52 ) Does the Holiday Effect Differ from Religious to Non-Religious Holidays? Empirical Evidence from Egypt
( 53 ) Financial Deepening, Interest Rate Spread and Economic Growth: New Evidence from Sub-Sahara Africa
( 54 ) What Drives Banking Stability? Empirical Evidence from ECOWAS Countries
( 55 ) The Profitability of Momentum Strategies: Empirical Evidence from Damascus Securities Exchange (DSE)
( 56 ) An Investigation of the Relationship between Manufacturing Output and Economic Growth : Evidence from Nigerias Data Set
( 57 ) Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence
( 58 ) Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach
( 59 ) Forecasting Equity Index Volatility: Empirical Evidence from Japan, UK and USA Data
( 60 ) Intention to Use E-Recruitment System: Empirical Evidence from Jobseekers in the Advertising Industry in Malaysia
( 61 ) Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria
( 62 ) Exchange Rate and Foreign Reserves Interface: Empirical Evidence from Nigeria
( 65 ) The Relationship between Financial Development, Economic Growth, and Inflation: Evidence from Southeast Asia
( 66 ) Exchange Rate Pass-through to Prices: VAR Evidence for Albania
( 67 ) Externality Effects of Sachet and Plastic Bottled Water Consumption on the Environment: Evidence from Benin City and Okada in Nigeria
( 69 ) Analysis of Credit Ratings Determinants: Evidences in Brazilian and American States
( 70 ) The Impact of Social Media on Economic Growth: Empirical Evidence of Facebook, YouTube, Twitter and Pinterest
( 71 ) The Impact of Economic Growth, Oil Price, and Financial Globalization Uncertainty on Financial Development: Evidence from Selected Leading African Countries
( 72 ) Interest Rate Ceilings and Financial Exclusion in Kenya: Evidence from Commercial Banks’ Sectoral Credit Distribution
( 73 ) Non-Linear Effects of Intellectual Property Rights on Technological Innovation: Evidence from Emerging and Developing Countries
( 74 ) Effect of Tax Administration on Tax Revenue of States in African Countries: Evidence from Nigeria
( 75 ) Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry
( 76 ) Influence of Corporate Characteristics on Firm Leverage: Evidence from Bangladesh
( 77 ) Exploring the Linkages between Remittances, Economic Growth and Poverty: Empirical Evidence from Pakistan
( 78 ) The Reasons Behind the Shift of Patients from Public to Private Hospitals: Evidence from Public Hospitals in Cumilla City Corporation
( 79 ) Analyzing the Impact of Eco-Innovation on Carbon Emissions Abatement: Evidence from OECD Countries
( 80 ) Research on the Construction and Application of Chinese Enterprises Overseas Port Investment Confidence Index Based on D-S Evidence Theory
( 81 ) Decision Making of Charity Fund Allocation: Evidence from Hong Kong
( 82 ) Financial Development and Economic Growth in Nigeria: New Evidence from a Threshold Autoregressive and Asymmetric Analysis
( 83 ) Income Shocks and Child Mortality Rates: Evidence from Fluctuations in Oil Prices
( 84 ) Money Supply & Growth Nexus: Evidence from Nigeria
( 85 ) World Governance Indicators and Fraud: Evidence from One Belt One Road Countries
( 86 ) CSR Themes Quality, Good Corporate Governance, and Earnings Management: Evidence from Indonesia
( 87 ) Twin Deficit Hypothesis and Macroeconomic Fundamentals: New Evidence from Nigeria