The determinants of corporate debt maturity: evidence from UK firms

Abstract

This paper investigates the empirical determinants of corporate debt maturity structure. This is done by testing several leading theoretical models of debt maturity structure using a cross-sectional data set of 321 non-financial UK firms. The evidence lends considerable support to the prediction that the impact of firm size on debt maturity is positive. The findings also provide support for the notion that firms match the maturity structure of their debt to that of their assets. The findings reveal that agency-related costs and volatility of firm value exert a negative impact on debt maturity. The empirical analysis provides no evidence that taxes affect debt maturity structure. Finally, the empirical analysis is not supportive of the signalling hypothesis that firms use their debt maturity structure to signal information to the market.