Ownership structure and debt maturity: new evidence from Spain

Abstract

This paper builds upon the scarce evidence about the relationship between ownership structure and debt maturity using a sample of listed Spanish firms. Our results suggest that there is a non monotonic (concave) relationship between long term debt and managerial ownership. Long term debt and managerial ownership relate positively at low levels of managerial ownership and negatively at higher levels. Moreover, the results offer support for the presence of a non-monotonic relationship (concave) between debt maturity and the presence of a large shareholder. The relationship between these variables is positive when the ownership of the large investors is low, and it becomes negative for higher levels of ownership. In addition, our evidence shows that firms use more short term debt when the main shareholder is a bank. We also find that firms use more long term debt when they are smaller and more indebted. In addition, firms take decisions about debt maturity without considering tax effects, but seeking to avoid the term premium on the interest rates. Finally, the results confirm the non-monotonic relationship between long term debt and credit risk identified by Diamond (J Econ 106:709-737, 1991).