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Corporate Debt Maturity Choice in Transition Financial Markets

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  • Andreas Stephan
  • Oleksandr Talavera
  • Andriy Tsapin

Abstract

This 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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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.82460.de/dp784.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 784.

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Length: 36 p.
Date of creation: 2008
Date of revision:
Handle: RePEc:diw:diwwpp:dp784

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Keywords: Debt maturity; capital structure; transition period; Ukraine;

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References

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Cited by:
  1. Andreas Stephan & Oleksandr Talavera & Andriy Tsapin, 2011. "Main bank power, Switching Costs, and Firm Performance. Evidence from Ukraine," University of East Anglia Applied and Financial Economics Working Paper Series 026, School of Economics, University of East Anglia, Norwich, UK..
  2. Stephan, Andreas & Talavera, Oleksandr & Tsapin, Andriy, 2011. "Corporate debt maturity choice in emerging financial markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(2), pages 141-151, May.
  3. Andreas Stephan & Andriy Tsapin & Oleksandr Talavera, 2009. "Why Do Firms Switch Their Main Bank?: Theory and Evidence from Ukraine," Discussion Papers of DIW Berlin 894, DIW Berlin, German Institute for Economic Research.

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