Corporate Debt Maturity Structure Research Articles

An empirical analysis of corporate debt maturity structure

This paper provides an empirical investigation of the maturity structure of corporate debt. A dynamic model is estimated by GMM estimation procedure using data for an unbalanced panel of 429 non‐financial UK firms over the period of 1983–96. The evidence provides strong support for the hypotheses that firms with more growth opportunities in their investment sets tend to have more shorter‐term debt and firm size exerts a negative impact on debt maturity structure. The results also support the maturity‐matching hypothesis that firms match the maturity structure of their debt to the maturity of their assets. There is less support for the view that firms use their debt maturity structure to signal information to the market. We do not find evidence for a negative correlation between taxes and debt maturity. Our results also suggest that firms have long‐term target ratios and they adjust to the target ratio relatively fast, which might indicate that the costs of being away from target ratios are significant for firms.

The debt maturity structure of UK property companies

This paper investigates the corporate debt maturity structure of property companies quoted in the UK over the period 1989-95. The empirical results show that there is scope for property firms to signal to the market their true worth using their debt maturity decisions. In particular, the evidence shows that property companies with potential good news employ more short-term debt in their capital structure, which is consistent with the signalling hypothesis. The study also reveals that firms which are large, enjoy high returns, or are more focused on property trading employ more long-term debt in their capital structure. The evidence is also consistent with the conventional notion that property companies match their debt maturity to the life of the assets. The matching practice, however, is not done primarily on the basis of minimizing the agency costs of long-term debt. The empirical results are also consistent with the traditional notion that managers time their long-term debt issues based on the prevailing real estate market condition and their expectation of future interest rate movements. The evidence weakly suggests that property companies defer their long-term debt issues when interest rates are predicted to fall in the near future. Interest rate volatility, however, do not appear to have any significant influence on the debt maturity policy of property companies.

The Determinants of Corporate Debt Maturity Structure

The authors examine the empirical determinants of debt maturity structure using a maturity structure measure that incorporates detailed information about all of a firm's liabilities. They find that larger, less risky firms with longer-term asset maturities use longer-term debt. Additionally, debt maturity varies inversely with earnings surprises and a firm's effective tax rate but there is only mixed support for an inverse relation with growth opportunities. The authors find strong support for the prediction of a nonmonotonic relation between debt maturity and bond rating; firms with high or very low bond ratings use shorter-term debt. Copyright 1996 by University of Chicago Press.

The Maturity Structure of Corporate Debt

The Maturity Structure of Corporate Debt

The Maturity Structure of Corporate Debt

ABSTRACTWe provide an empirical examination of the determinants of corporate debt maturity. Our evidence offers strong support for the contracting‐cost hypothesis. Firms that have few growth options, are large, or are regulated have more long‐term debt in their capital structure. We find little evidence that firms use the maturity structure of their debt to signal information to the market. The evidence is consistent, however, with the hypothesis that firms with larger information asymmetries issue more short‐term debt. We find no evidence that taxes affect debt maturity.

Abstract--An Empirical Investigation of the Corporate Debt Maturity Structure

Abstract--An Empirical Investigation of the Corporate Debt Maturity Structure