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Maturity mismatches of Chinese listed firms

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  • Wang, Yizhong
  • Wang, Ting
  • Chen, Lifang

Abstract

Maturity mismatches in the financial sector have been extensively examined, but those in non-financial sectors have been largely overlooked. We explore why Chinese listed firms have a high short-term debt ratio from the perspective of asset-debt maturity mismatches, which involve firms using short-term debts to support their long-term investments. We investigate whether the maturity mismatch is actively or passively adopted by Chinese listed firms by analyzing the effect of financial constraints on maturity mismatches. We find that the mismatching behavior is more pronounced for firms with fewer financial constraints, supporting our active mismatch view. Reducing the cost of debt acts as an incentive for firms to actively adopt maturity mismatches. Our study thus identifies one reason for high short-term debt ratios in emerging markets.

Suggested Citation

  • Wang, Yizhong & Wang, Ting & Chen, Lifang, 2021. "Maturity mismatches of Chinese listed firms," Pacific-Basin Finance Journal, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:pacfin:v:70:y:2021:i:c:s0927538x21001876
    DOI: 10.1016/j.pacfin.2021.101680
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    More about this item

    Keywords

    Maturity mismatch; Financial constraints; Cost of debt;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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