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Previous theoretical research asserts that an optimal policy of debt maturity structure mitigates the various agency conflicts that arise through debt contracts. We test this hypothesis on Small and Medium-Sized Enterprises (SMEs), which are very sensitive to agency problems. Such problems mainly arise between owners and debt providers, due to SMEs recording high growth and having few fixed assets and informational asymmetry. We provide evidence on the relevant effect of underinvestment, asset substitution, and overinvestment problems on SME debt structure. Results appear to be robust to both the endogeneity problem of explanatory variables and the censored dependent variable.

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