Influencing Factors Of The Debt Maturity Structure Of Listed Companies In China With Economies In Transition Research

Debt maturity structure is one of most important issues in corporate finance. The costs and benefits of debtor and creditor that are associated with the use of debt financing can provide a potential explanation for the optimal debt maturity structure chosen by a firm. Traditional financial theories turned to this issue since 1970's. The existing theories on debt maturity choice included agency cost hypothesis, signaling hypothesis, tax hypothesis, and maturity matching hypothesis etc. Many determinants of debt maturity structures were identified such as asset maturity, size, growth opportunity, default risk and tax rate. However, much of these researches have been directed largely towards companies listed in developed countries, such as the U.S., U.K. and Western Europe. Only a few studies paid attention to the debt maturity choice in different institutional environments, especially in a transition economy which changed from former planned economic.As well known, Chinese listed companies replied deeply on short debt in financing structure, which are different from western developed countries. With higher exterior uncertainty in the transition, Chinese companies have to pay attention to the effect of institutional transition on their development opportunity, strategy, financing behavior, management decision and trade cost all along. Therefore, their "reasonless behaviors" are much more likely to be the necessary choices for acclimatizing themselves to institutional environment. Given the special institutional environment may be interesting and important for academics, managers, and policy makers to determine how institutional environment affects the debt maturity structure of Chinese listed company choice, and whether the debt maturity structure theories developed in Western countries can be applied to Chinese companies in the same way. In particular, it is interesting to investigate how Chinese listed companies chose their debt maturity in the transition, and what factors should be responsible for the choice of debt maturity structures of Chinese listed companies. All these problems are open for theoretical analysis and empirical test.Following the thought of theoretical analysis, empirical test and then giving the proposition, this dissertation suggests a general framework to understand the debt maturity structure of Chinese companies. Based on reviewing relevant literatures and combined the institutional environment of Chinese transition economy, the author suggests that firms with different attributes of macroeconomics-specific, firm-specific and governance-specific maintain different debt maturity structures each of which is optimal to them. Then, with a new and comprehensive panel of publicly listed companies in China, the author uses econometrical technologies of linear regression, dynamic adjustment model, binary logistic and differences estimation to develop the optimal debt maturity structure model for Chinese listed companies.The main findings of the dissertation are as follows: First, the Change of macroeconomics environment including economic development, financial system, capital market and legal system has important influence on debt maturity structure of Chinese listed companies. The development of financial intermediaries, legal order and efficiency are significantly positively related to debt maturity, and term structure, the development of stock markets, lack of information disclosure in financial market are significantly negatively related to debt maturity, while the coefficient of economic development is insignificant. It is also found that the influence of macroeconomics environment is not same for listed companies with different size. It is the development of bond market and legal environment that have much more effects on big firms, while the improvement of bank system affects small firm better. Besides, there are significant difference for debt maturity structure of Chinese listed company in each region and industry.Second, the debt maturity structure theories developed in Western countries can be applied to Chinese companies almost in the same way. Firms with shorter asset maturity, more fixed asset, larger size or higher interest rate use more long-term debt. Firms with more free cash flow or better quality issue more short-term debt. The relationship between the growth opportunity, default risk and debt maturity is statistically insignificant. Therefore, maturity matching hypothesis, agency cost hypothesis and signaling hypothesis are proved to explain the debt financing behavior of Chinese listed company appropriately. Moreover, the result of dynamic model offers strong evidence that transaction cost affect debt maturity of Chinese companies.Third, debt maturity structure and corporate governance are substitutes. Firm's debt maturity increases with the improvement of corporate governance. Lower ownership concentration and more independent board of directors are helpful for companies to get long-term credit. The relationship between state ownership and debt maturity structure is non-monotonic. There is no evidence for the effect of managerial and institutional ownership in china. In addition, the change of character of the first shareholders has significant impact on corporate debt maturity structure due to the difference between listed companies controlled by government directly and indirectly.This dissertation has the following innovations or improvements:Firstly, this paper is a complement of existing research for debt maturity structure, which empirically analyses the debt maturity choice of Chinese listed companies based on extant works in western development countries and institutional characteristic of transition economy in China. It consummates the existing theory system of debt maturity by discussing the determinants of debt maturity structures in specific institutional environment, and resolving the effect of institution on corporate debt maturity choice. Extensively examining the determinants of debt maturity structure from macroeconomics-specific, firm-specific and governance-specific dimensions deepen the extant research frame. It is therefore in favor of understanding the determinants of Chinese listed company's financing behavior systematically, and finding out the deep reason why short-term debt is dominant in Chinese company better.Secondly, this paper improves the existing analytic approach of domestic research. Given the long-term decision of corporate debt maturity structure, the author constructs a dynamic adjustment model to analyze empirically how firm characteristics affect debt maturity structure choice by Chinese non-financially listed companies' panel data, when controlling time-specific effects and time-invariant unobservable firm specific fixed effects. The result shows that transaction cost keep companies away from optimal debt maturity structure in our country.Thirdly, some particular conclusions on debt maturity structure have been drawn out at institutional background of Chinese transition economy. For example, the development of economy does not change the proportion of short debt to long debt, although it makes total amount of debt increased; the size of stock market is negatively related to debt maturity structure, to the extent that equity financing and long debt financing substitute mutually; there are no obvious relationship between default risk and corporate debt maturity for soft budget constraint of government. Moreover, this paper also focuses on determinants for each sub-sample, and the difference between them.Finally, this paper associates problems of corporate governance in China with debt maturity structure choice at first time, and proves that corporate governance structure can act as a substitute for the short-term debt. Firms with higher level of inner governance can get much more long-term debt outside. The paper also put emphasis upon the effect of government intervention, and found a significant U-shaped relation between state ownership and debt maturity structure, suggesting that debt maturity first decreases then increases as the ownership of government shareholder increase. Simultaneously, firms controlled by government directly use much more long-term debt than firms controlled by government indirectly or firms without government control. At last, the author proved that the transformation of direct government control will lead to structural adjustment for corporate debt maturity structure by examining the effect of the first shareholders change empirically.