The Research Of Firm's Debt Maturity Structure In The Asymmetric Information Condition

Capital is vital to a firm's manufacture and development. When considering financial source, it is not only confronted with equity or debt financing choice, but also with debt maturity choice. However, almost all of academic researches about financial structure at home think of all kinds of firm's debt as the same, and discuss the optimal capital structure, rarely relate to debt structure. Debts account for a large proportion in state-owned enterprises and play an important role. In addition, finance market in China still stands in the immature phase, and information asymmetry is serious. So this paper focuses on studying the effect of asymmetric information between the firm's insiders and lenders on the debt maturity structure. At first, this paper analyses how adverse selection, asymmetric information temporal distribution and debt agency cost caused by moral hazard influence debt maturity structure, then generalize all factors that may affect debt maturity choice in the information asymmetry condition. In succession, this paper tests the relation between the disclosure practices of firms and analyst earnings forecast dispersion, to confirm whether it is available and feasible to proxy asymmetric information with analyst earnings forecast dispersion. Finally, this paper applies pooled regression to empirically examine the determinants of Chinese listed companies' debt maturity structure, which are selected in accordance with adverse selection, moral hazard, and tax-related hypotheses. Our research finds a strong negative correlation between the disclosure practices of firms and analyst earnings forecast dispersion, firms with more informative disclosure policies have a less dispersion among individual analyst forecasts. In addition, it is shown that information asymmetry have a strong negative relationship with debt maturity, firms with short asymmetric information rely more on long-term debt, vice versa. And firms with both good news and high asymmetric information tend to issue a short-term debt for signaling its quality to reduce adverse selection cost. Next, it is confirmed that the non-monotonic relationship between the firm's credit rating and debt maturity (Diamond's liquidity risk model). The maturity matching is strongly supported, but no evidence is found in support of the tax related hypothesis.