Performance feedback and Maturity Mismatch : Evidence from China

Abstract: Based on the behavioral theory of the firm, we argue that different performance feedback changes firms' financing demands and financing sources, thus affecting corporate maturity mismatch of investment and financing. Using data on Chinese A-share listed firms, our findings suggest that positive performance feedback reduces maturity mismatch and, conversely, negative performance feedback exacerbates maturity mismatch. Further research shows that financing constraints are the main channel through which performance feedback affects maturity mismatch. We also explore the heterogeneity of this influence relationship across different characteristics of firm property rights, factor intensity, and performance feedback persistence. Our study helps to explain the formation of corporate maturity mismatches from the perspective of a firm's behavior. Meanwhile, these findings carry significant implications for achieving the goals of stable capital market operation and high-quality corporate development in China and emerging market countries