Debt maturity structure of Chinese companies

K Cai, R Fairchild, Y Guney - Pacific-Basin Finance Journal, 2008 - Elsevier
K Cai, R Fairchild, Y Guney
Pacific-Basin Finance Journal, 2008Elsevier
Numerous studies have focused on the theoretical and empirical aspects of corporate
capital structure since the 1960s. As a new branch of capital structure, however, debt
maturity structure has not yet received as much attention as the debt-equity choice. We use
the existing theories of corporate debt maturity to investigate the potential determinants of
debt maturity of the Chinese listed firms. In addition to the traditional estimation methods, the
system-GMM technique is used to explicitly control for the endogeneity problem. We find that …
Numerous studies have focused on the theoretical and empirical aspects of corporate capital structure since the 1960s. As a new branch of capital structure, however, debt maturity structure has not yet received as much attention as the debt-equity choice. We use the existing theories of corporate debt maturity to investigate the potential determinants of debt maturity of the Chinese listed firms. In addition to the traditional estimation methods, the system-GMM technique is used to explicitly control for the endogeneity problem. We find that the size of the firm, asset maturity and liquidity have significant effects in extending the maturity of debt employed by Chinese companies. The amount of collateralized assets and growth opportunities also tend to be important. However, proxies for a firm's quality and effective tax rate apparently report mixed or unexpected results. Debt market and equity market conditions are also examined in relation to corporate loan maturity. The system-GMM results show that market factors seem to influence debt maturity decisions. Finally, corporate equity ownership structure has also been found to have some impact on debt maturity mix.
Elsevier
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