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An empirical analysis of corporate debt maturity structure

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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Financial Management Wiley

An empirical analysis of corporate debt maturity structure

European Financial Management , Volume 6 (2) – Jun 1, 2000

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Publisher
Wiley
Copyright
Blackwell Publishers Ltd 2000
ISSN
1354-7798
eISSN
1468-036X
DOI
10.1111/1468-036X.00120
Publisher site
See Article on Publisher Site

Abstract

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.

Journal

European Financial ManagementWiley

Published: Jun 1, 2000

There are no references for this article.