Firm and Country Determinants of Debt Maturity. International Evidence

Abstract

This paper analyses the effect of firm- and country-level determinants on debt maturity structure and how this effect varies across countries and across firm size. Results for 39 countries show that firm-level variables such as asset maturity, size, firm quality and leverage affect debt maturity structure. Institutions and banking structure also influence corporate debt maturity. While the efficiency of the legal system, protection of creditors’ rights and bank concentration show a positive relationship to debt maturity, the protection of property rights and the weight of banks in the economy have a negative effect on firm debt maturity. However, these firm- and country-level determinants vary according to firm size. The agency costs and signalling hypotheses are more relevant in explaining the debt maturity structure of large firms, while the asset maturity and tax hypotheses are more pertinent in the case of small firms. Most of the country-level determinants of debt maturity are size dependent; in particular, bank concentration has a positive influence on debt maturity only for the subsample of small firms, while the weight of banks in the economy has a negative influence for small firms.