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Corporate Debt Maturity Choice in Transition Financial Markets

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Author Info
Stephan, Andreas () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
Talavera, Oleksandr (Aberdeen Business School)
Tsapin, Andriy (European University Viadrina)

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Abstract

This paper investigates the determinants of liability maturity choice in transition markets. We formulate a model of ¯rm 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 firm 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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Publisher Info
Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 125.

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Length: 37 pages
Date of creation: 02 Apr 2008
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Handle: RePEc:hhs:cesisp:0125

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Related research
Keywords: debt maturity; capital structure; transition period; Ukraine;

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Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
G30 - Financial Economics - - Corporate Finance and Governance - - - General
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stephan, Andreas & Tsapin, Andriy & Talavera, Oleksandr, 2009. "Why Do Firms Switch Their Main Bank? - theory and evidence from Ukraine," Working Paper Series in Economics and Institutions of Innovation 180, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
    Other versions:
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