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Corporate Debt Maturity - An international comparison of firm debt maturity choices

Author

Listed:
  • Sandra Correia

    (Faculdade de Economia da Universidade do Porto)

  • Paula Brito

    (Faculdade de Economia & LIAAD INESC TEC, Universidade do Porto)

  • Elísio Brandão

    (Faculdade de Economia da Universidade do Porto)

Abstract

This paper explores the determinants of debt maturity for a sample of 3306 non-financial listed firms from thirteen European countries (twelve countries of Euro Zone and United Kingdom) in 2011. According to literature, two sets of explanatory variables are included: (i) characteristics of firms and (ii) institutional environment. The firm-level variables are growth opportunities, size, tax, firm value volatility, quality, rating, assets maturity and leverage. The model also includes independent country-level variables about term structure and volatility of interest rates, efficiency and type of legal system, banking sector size, turnover and size of stock market. Overall, our results confirm prior literature predictions about the influence of firm-level variables on firm debt maturity, with the exception of tax and growth opportunities. The results also suggest that the type of legal system has a significant impact on debt maturity and the higher the size of banking system in the economy, the lower the preference of firm for long-term debt. However, we cannot confirm the positive impact of expectations of evolution rate and development level of stock markets on debt maturity.

Suggested Citation

  • Sandra Correia & Paula Brito & Elísio Brandão, 2014. "Corporate Debt Maturity - An international comparison of firm debt maturity choices," FEP Working Papers 544, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:544
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    References listed on IDEAS

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    Cited by:

    1. Anjala Kalsie & Aishwarya Nagpal, 2018. "The Determinants of Corporate Debt Maturity for NSE-Listed Corporates," FIIB Business Review, , vol. 7(1), pages 43-56, March.
    2. Lianet Farfán Pérez & Jorge O. Moreno & Maria de las Mercedes Adamuz, 2022. "Madurez de la deuda corporativa como variable de tiempo: evidencia de las empresas públicas de México," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 17(3), pages 1-34, Julio - S.
    3. Faisal Seraj Alnori, 2023. "What do we Know about Corporate Debt Maturity Structure in Saudi Arabia?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 13(6), pages 1-13.

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    More about this item

    Keywords

    Debt Maturity; Capital Structure; Factor Analysis; OLS;
    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

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