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Determinants of corporate debt maturity in South America: Do institutional quality and financial development matter?

Listed author(s):
  • Kirch, Guilherme
  • Terra, Paulo Renato Soares
Registered author(s):

    We test whether a country's level of financial development or institutional quality (or both) has a first‐order effect on corporate debt maturity decisions on a sample of 359 non-financial firms from five South American countries over a 12‐year period. We find that there is a substantial dynamic component in the determination of a firm's debt maturity, and firms face moderate adjustment frictions toward their optimal maturities. More importantly, the level of financial development does not influence debt maturity, whereas the institutional quality of a country has a significant positive effect on the level of long-term debt in a firm's financial structure. Our results support the hypothesis that the quality of national institutions is an important determinant of corporate financing in general and of debt maturity in particular.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0929119912000491
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    Article provided by Elsevier in its journal Journal of Corporate Finance.

    Volume (Year): 18 (2012)
    Issue (Month): 4 ()
    Pages: 980-993

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    Handle: RePEc:eee:corfin:v:18:y:2012:i:4:p:980-993
    DOI: 10.1016/j.jcorpfin.2012.05.004
    Contact details of provider: Web page: http://www.elsevier.com/locate/jcorpfin

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