Institutional Background And The Choice Of Debt Maturity Structure

The paper adopts cross-section data of non-financial listed companies in China, and applies OLS to empirically study how the marketization, product market development, financial market development, legal environment and governmental intervention affect the choice of debt maturity structure with related variables being controlled. The study shows that institutional factors have the important effect on the choice of debt maturity. (1)The marketization index is negatively correlated with debt maturity level. It shows that the listed companies in the provinces of high marketization index have significantly low debt maturity level. (2) The product market development is negatively correlated with debt maturity level. It shows that the companies in the provinces of high product market index transmit investors the information that the companies have high corporate governance level, so that investors are more willing to provide these companies long-term equity capital. (3)The financial market development is negatively correlated with debt maturity level. It shows that the supervision of bank capital management is better and the tightening of long-term loan standard is stricter. Meanwhile, in the provinces of high financial market index, the institution of financial market is more complete, the ways of long-term financing is more, the kinds of long-term financing is more complete. (4)The legal index is negatively correlated with debt maturity level. It shows that when companies are financing by long-term financing, the investors in the provinces of good legal environment are more willing to provide listed companies the long-term equity capital.(5)The governmental intervention is positively correlated with debt maturity level. It shows that governmental intervention as an institutional factor has important effect on the lending practices of companies. Banks prefer to lend long-term loans to the companies which have government relations and government background, and these companies are easier to get long-term loans from banks by governmental intervention.