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The Determinants and Implications of Matching Maturities

Author

Listed:
  • Sang-Gyung Jun

    (School of Business, Hanyang University, 17 Haengdang-dong Seongdong-gu, Seoul 133-791, Korea)

  • Frank C. Jen

    (School of Management, State University of New York, Buffalo, NY 14260, USA)

Abstract

Though maturity matching is a common practice in real finance, no academic study has been conducted yet on cross-sectional variations in the degree of maturity matching. This study derives hypotheses on the maturity matching and empirically tests them. We show that firms with a higher degree of maturity matching are more likely to stabilize equity values: they have lower stock return volatilities. We also show evidence supporting the existence of an optimal level of maturity matching. Though financially strong firms generally employ a higher degree of maturity matching, the relationship between financial strength and maturity matching is not monotonic.

Suggested Citation

  • Sang-Gyung Jun & Frank C. Jen, 2005. "The Determinants and Implications of Matching Maturities," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 309-337.
    • Handle: RePEc:wsi:rpbfmp:v:08:y:2005:i:02:n:s0219091505000397
    DOI: 10.1142/S0219091505000397
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    Citations

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    Cited by:

    1. Ma, Sichao & Peng, Yuchao & Wu, Wanting & Zhu, Feifei, 2022. "Bank liquidity hoarding and corporate maturity mismatch: Evidence from China," Research in International Business and Finance, Elsevier, vol. 63(C).
    2. Onur Kemal Tosun & Lemma W. Senbet, 2020. "Does internal board monitoring affect debt maturity?," Review of Quantitative Finance and Accounting, Springer, vol. 54(1), pages 205-245, January.
    3. Ivan E. Brick & Rose C. Liao, 2017. "The joint determinants of cash holdings and debt maturity: the case for financial constraints," Review of Quantitative Finance and Accounting, Springer, vol. 48(3), pages 597-641, April.
    4. Yomna Abdulla & Viet Anh Dang & Arif Khurshed, 2016. "Debt maturity and initial public offerings," Review of Quantitative Finance and Accounting, Springer, vol. 47(4), pages 1129-1165, November.

    More about this item

    Keywords

    Maturity matching; immunization; agency costs; return volatility; financial strength;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

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