Corporate Debt Maturity Choice in Transition Financial Markets
AbstractThis paper investigates the determinants of liability maturity choice in transition markets. We formulate a model of firm value maximization that describes managers' choice of optimal debt structure. The theoretical predictions are tested using a unique panel of 4,300 Ukrainian firms during the period 2000-2005. Our estimates confirm the importance of liquidity, signaling, maturity matching, and agency costs for the liability term structure of firms operating in a transition economy. In addition, we find that companies do not react uniformly to determinants of debt maturity. Firms that mainly rely on external funds are sensitive to signaling and they consider the variability of firm value an important determinant of their debt maturity choice. For less constrained companies that rely more on internal funding, asset maturity is an essential determinant of debt structure.
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Bibliographic InfoPaper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 784.
Length: 36 p.
Date of creation: 2008
Date of revision:
Debt maturity; capital structure; transition period; Ukraine;
Other versions of this item:
- Stephan, Andreas & Talavera, Oleksandr & Tsapin, Andriy, 2008. "Corporate Debt Maturity Choice in Transition Financial Markets," Working Paper Series in Economics and Institutions of Innovation 125, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-05 (All new papers)
- NEP-CFN-2008-05-05 (Corporate Finance)
- NEP-FMK-2008-05-05 (Financial Markets)
- NEP-TRA-2008-05-05 (Transition Economics)
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