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Debt Maturity Structure and Firm Investment


  • Varouj A. Aivazian
  • Ying Ge
  • Jiaping Qiu


This study shows that the maturity structure of a firm’s debt has a significant impact on its investment decisions. We show, after controlling for the effect of the overall level of leverage, that a higher percentage of long-term debt in total debt significantly reduces investment for firms with high growth opportunities. In contrast, the correlation between debt maturity and investment is not significant for firms with low growth opportunities. The results are strong at the firm level and at the business segment level. These results hold even after controlling for the endogeneity problem inherent in the relationship between total leverage, the maturity composition of leverage, and investment.

Suggested Citation

  • Varouj A. Aivazian & Ying Ge & Jiaping Qiu, 2005. "Debt Maturity Structure and Firm Investment," Financial Management, Financial Management Association, vol. 34(4), Winter.
  • Handle: RePEc:fma:fmanag:aivaziangeqiu05

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    10. Jorge A. Muñoz Mendoza & Sandra M. Sepúlveda Yelpo & Carmen L. Veloso Ramos, 2019. "Non-linear Effects of Ownership Structure, Growth Opportunities and Leverage on Debt Maturity in Chilean Firms," 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. 14(1), pages 21-40, Enero-Mar.
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    16. Karren Lee-Hwei Khaw & Benjie Chien Jiang Lee, 2016. "Debt Maturity, Underinvestment Problem and Corporate Value," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 12(Suppl. 1), pages 1-1–17.
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    24. Li, Rui & Wan, Chi & Wang, Mengying, 2018. "U.S. corporate investment and foreign penetration: Imports and inward foreign direct investment," Journal of International Money and Finance, Elsevier, vol. 85(C), pages 124-144.

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