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Structure of Debt Maturity across Firm Types

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  • Cuneyt Orman
  • Bulent Koksal

Abstract

We investigate if and when the leading theories of debt maturity are useful in understanding the maturity choices of nonfinancial firms in a major developing economy, Turkey. Unlike most research, we use a dataset that provides financial information on not only large, publicly-traded firms but also small, privately-held firms across a wide variety of industries. Our strongest finding is that firms that have high leverage also have long maturity. Size, asset maturity, and credit quality are also important, although results depend on the type of firm group considered. The stability of the economic environment as measured by inflation and interest rate volatility also influences debt maturity decisions. Our findings are broadly consistent with the liquidity risk theory. The agency theory is also partially useful in understanding firms' maturity decisions, particularly for medium- and large-sized, publicly-traded firms. The signaling theory is most useful when the sample consists of large, publicly-traded firms. We find little evidence that taxes matter for maturity decisions. Our findings also provide some evidence that borrower-lender relationships might matter for debt maturity structures.

Suggested Citation

  • Cuneyt Orman & Bulent Koksal, 2015. "Structure of Debt Maturity across Firm Types," Working Papers 1521, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  • Handle: RePEc:tcb:wpaper:1521
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    References listed on IDEAS

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    More about this item

    Keywords

    Debt maturity structure; Nonfinancial firms; Turkey;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • 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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