Firm and country determinants of debt maturity: New international evidence

• Published date: 01 December 2017
• DOI: http://doi.org/10.1111/infi.12116
• Author: Víctor M. González
• Date: 01 December 2017

DOI: 10.1111/infi.12116

ORIGINAL MANUSCRIPT

Firm and country determinants of debt maturity:

New international evidence

Víctor M. González

Department of Business Administration,

University of Oviedo, Oviedo, Spain

Correspondence

Víctor M. González, Department of

Business Administration, University of

Oviedo, Avda. Del Cristo s/n. 33071

Oviedo, Spain.

Email: vmendez@uniovi.es

Funding information

Spanish Ministry of Economy and

Competitiveness, Grant numbers:

ECO2012-31772, ECO2015-66184R;

University of Oviedo International Campus

of Excellence

Abstract

This paper shows the influence of firm- and country-level

determinants on debt maturity structure for 39 countries

during the period 1995–2012. Efficiency of the legal

system, protection of creditors' rights and bank concentra-

tion show a positive relationship with debt maturity, while

the weight of banks in the economy has a negative effect

on firm debt maturity. The positive influence of bank

concentration on corporate debt maturity reveals that

creditors are more likely to extend debt maturity when

the bank credit market is concentrated. This positive effect

of bank concentration is reduced in high quality institutional

environments. Moreover, the effects of bank concentration

and the weight of banks in the economy on corporate debt

maturity are higher in smaller firms.

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INTRODUCTION

Studies on firm capital structure have recently focused on the influences of institutional and legal

features on the amount of debt financing. The literature on capital structure has analysed the influence

of investor protection and institutions and has revealed that institutional factors play an important role

in the choice of capital structure. Empirical studies show, for instance, that better protection of creditors

increases the availability of debt by reducing adverse selection and the moral hazard problems of debt

(Giannetti, 2003; Qian & Strahan, 2007), while stronger protection of property rights favours increased

use of equity over debt (González & González, 2008).

Previous studies show the existence of differences in debt maturity among countries. Barclay and

Smith (1995) report a percentage of total long-term debt of around 70% for their sample of U.S. listed

firms, while Antoniou, Guney, and Paudyal (2006) show that the long-term debt ratio of French,

German, and U.K. listed firms is around 59%, 53%, and 46%, respectively. Demirgüç-Kunt and

Maksimovic (1999) and Fan, Titman, and Twite (2012) reveal that firms in developing countries use

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© 2017 John Wiley & Sons Ltd wileyonlinelibrary.com/journal/infi International Finance. 2017;20:256–270.