Structure of Debt Maturity Across the Firm Type Spectrum

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 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 influence debt maturity structures.

Corporate board vigilance and insolvency risk: a mediated moderation model of debt maturity and fixed collaterals

“…The current study is based on the proposition that debt maturity is more crucial when compared to capital structure; also, the measure used to compute maturity is multidimensional as it is capable of interpreting the role of both short-term and long term-debt maturity [Xuezhou et al, 2020]. The mediator variable debt maturity is measured as a ratio of long-term liabilities to total liabilities [Orman and Bülent, 2015].…”

Do leverage decisions mediate the relationship between board structure and insolvency risk? A comparative mediating role of capital structure and debt maturity

“…Capital structure is calculated through the DER, which is a ratio between total debt and total equity (Ibrahim and Lau, 2019). Orman and B€ ulent (2015) measured the DMR as a proxy for debt maturity structure. It is a ratio between long-term debt and total debt, and a similar approach is taken in the present study.…”

Are Growth Led Financing Decisions Causing Insolvency in Listed Firms of Pakistan?

“…The proxy for capital structure is 'Debt Ratio' (DR) which is calculated by dividing long term debt to total assets, similar to the one used by Heyman, Deloof and Ooghe, (2008), Sheikh and Wang (2012), Vakilifard, Gerayli, Yanesari and Ma'atoofi (2011), and Ibrahim and Lau (2019). The second part of the financing decision is 'Debt Maturity Ratio' (DMR), which is measured by the ratio between long term debt and total debt (Barclay & Smith, 1995;Orman & Bu¨lent , 2015).…”