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Empirical Investigation of Debt-Maturity Structure: Evidence from Pakistan

Author

Listed:
  • Attaullah Shah

    (Institute of Management Sciences, Peshawar)

  • Shahid Ali Khan

    (Institute of Management Sciences, Peshawar)

Abstract

We examine the empirical determinants of debt-maturity structure of 266 firms listed on the KSE over the period 2000 to 2004 using several variants of dynamic panel data models. We find mixed support for the agency cost hypothesis as our results show that debtmaturity increases with the size of the firm; however, growth options do not have any significant influence on debt-maturity structure. Our results lend unambiguous support to the maturity-matching hypothesis as debt-maturity varies inversely with operating activities and directly with the maturity of long-lived assets. Finally, we find evidence that supports the taxbased hypothesis but no evidence to support the signaling hypothesis. Moreover, the results demonstrate that there is a significant dynamic component in the determination of optimal debt-maturity structure of the sampled firms .

Suggested Citation

  • Attaullah Shah & Shahid Ali Khan, 2009. "Empirical Investigation of Debt-Maturity Structure: Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(4), pages 565-578.
    • Handle: RePEc:pid:journl:v:48:y:2009:i:4:p:565-578
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    File URL: http://www.pide.org.pk/pdf/PDR/2009/Volume4/565-578.pdf
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    Citations

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    Cited by:

    1. Idrees Ali Shah & Syed Zulfiqar Ali Shah & Muhammad Nouman & Farman Ullah Khan & Daniel Badulescu & Laura-Mariana Cismas, 2021. "Corporate Governance and Cash Holding: New Insights from Concentrated and Competitive Industries," Sustainability, MDPI, vol. 13(9), pages 1-17, April.
    2. Shah, Mohay Ud Din & Shah, Attaullah & Khan, Safi Ullah, 2017. "Herding behavior in the Pakistan stock exchange: Some new insights," Research in International Business and Finance, Elsevier, vol. 42(C), pages 865-873.
    3. Kanwal Iqbal Khan & Faisal Qadeer & Mário Nuno Mata & José Chavaglia Neto & Qurat ul An Sabir & Jéssica Nunes Martins & José António Filipe, 2021. "Core Predictors of Debt Specialization: A New Insight to Optimal Capital Structure," Mathematics, MDPI, vol. 9(9), pages 1-25, April.
    4. Khan, Naimat U. & Shah Jehan, Qurat Ul Ain & Shah, Attaullah, 2017. "Impact of taxation on dividend policy: Evidence from Pakistan," Research in International Business and Finance, Elsevier, vol. 42(C), pages 365-375.
    5. Kanwal Iqbal Khan & Faisal Qadeer & Mário Nuno Mata & Rui Miguel Dantas & João Xavier Rita & Jéssica Nunes Martins, 2021. "Debt Market Trends and Predictors of Specialization: An Analysis of Pakistani Corporate Sector," JRFM, MDPI, vol. 14(5), pages 1-16, May.

    More about this item

    Keywords

    Debt Maturity; Capital Structure; Panel Data; GMM; Pakistan;
    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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